We'll slash marginal tax rate to below 50pc - Taoiseach Enda Kenny
Published 05/06/2015 | 02:30
Taoiseach Enda Kenny has pledged for the first time to slash the marginal rate of tax to below 50pc in next year's budget.
Mr Kenny said he will target the universal social charge (USC) and the Irish Independent understands the controversial tax could be reduced by around 1.5pc.
The move is further evidence of the Coalition preparing to announce another 'giveaway' budget ahead of the next general election.
Speaking at the Grant Thornton Worldwide Tax Conference, the Taoiseach said cutting personal tax would stimulate the economy and attract more emigrants home.
"That is why we cut the personal tax rate to 51pc in the last budget for all those earning less than €70,000. And that is why after the next budget in October we will reduce the tax rate on these workers to below 50pc, this time by cutting the rate of USC," he said.
It was previously mooted that the marginal rate would be reduced to 50pc through a mixture of USC and PRSI cuts.
However, it now seems Mr Kenny is determined to focus his cuts on the USC, which has proven contentious with the public since it was introduced at the height of the financial crisis.
Director of Taxation at Chartered Accountants Ireland Brian Keegan said reducing the marginal tax rate to below 50pc would see someone earning €50,000 benefit by €300 a year.
Mr Kenny's intervention follows the union pay talks which saw the Government sign off on pay increases and pension levy cuts for public sector workers.
The Labour Party-led deal, which will see some workers receive pay increases of €2,000 over two years, caused some unease among Fine Gael members.
However, a senior Government source last night insisted the Taoiseach's pledge to lower taxes showed the Coalition has a "plan for everybody".
"Lower tax helps the private sector and public sectors," the source said.
Last night, Mr Kenny pledged to introduce "well designed tax cuts" that reward hard work and enterprise.
He said the Government will begin the process of equalising the income tax treatment of the employed and the self-employed.
"I want Irish entrepreneurs and small businesses to play a significant role in delivering full employment. The discriminatory tax treatment of self-employed people inherited by this Government can no longer be justified," Mr Kenny said.
Tánaiste Joan Burton also pledged to cut the USC at a Labour Party policy forum last night. Ms Burton said nearly a quarter of the income tax take comes from USC, which she insisted is "too high".
"In the next budget, we will continue the process of reducing USC. And in our next term, the Labour Party in government will introduce an ambitious reform of USC to further reduce the burden for low and middle-income workers," she added.
Ms Burton said she believes Labour will be in the next Government but also took a swipe at Fine Gael.
"Labour makes up one-third of the Government, and it follows that things would have been done differently if we were in government alone," she said.
However, she said it would be "disingenuous" to take credit for the reforms and disown the "painful measures".