Taoiseach Leo Varadkar has resurrected the idea that the Government could introduce a new lower tax rate of 30 per cent.
The proposal, which could put thousands back in workers' pockets, was discussed earlier this year when Varadkar was Tanaiste. However, it was shot down by the minister with responsibility for tax affairs Paschal Donohoe as it would result in the Exchequer’s tax take being reduced by tens of billions of euro in the coming years, reports the Irish Mirror.
Now that Varadkar is Taoiseach again, his controversial policy will be “discussed at Government level between now and the next Budget”, he told reporters at the annual Taoiseach’s Christmas roundtable interview. “We want to help people somewhat with the cost of living, certainly, with a combination of pay rises and income tax reductions,” Mr Varadkar said, adding that this will help working people with the cost of living, “which is really important”.
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“I believe that work should pay, and I think that in Ireland people have to pay the highest rate of income tax on very modest incomes. We’re getting to [a standard rate cut-off point] of €40,000 next year - I'd like to move that up. The policy objective that I have set is that we should get to the point where people can earn up to €50,000 a year without having to pay the highest rate of income tax.
"It might take a few Budgets to get there, but I'm determined that we should, whether we do it by increasing the standard rate cut-off point or by a middle tax rate [of 30pc]. I'm not hung up on that [the new 30pc middle tax rate] and I never have been. But that's something obviously we'll have to discuss at Government level between now and the next Budget.
"But certainly if the public finances allow it, I would like to see us continue on that road, so that you will be able to earn more without having to pay the highest rate of income tax. We’ve moved a long way in the last couple of years on that. And I want that to continue.”
The Taoiseach has also reiterated a Fine Gael commitment to increase the current higher tax threshold where people pay 40 per cent of their income in tax to €50,000. The Revenue’s current tax bands show that for a single person with no dependents you pay 20 per cent on income up to €36,800 and 40 per cent on the balance above that.
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