Monday 26 September 2016

Noonan accused of 'tax U-turn' ahead of FG manifesto launch

Published 13/02/2016 | 02:30

Fianna Fáil Leader Micheál Martin in Lifford on his tour of Donegal. Photo: Brian McDaid
Fianna Fáil Leader Micheál Martin in Lifford on his tour of Donegal. Photo: Brian McDaid

Finance Minister Michael Noonan has been accused of a drastic U-turn on a key tax policy as part of Fine Gael's plan to buy the election.

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Mr Noonan has dramatically changed his stance on a significant tax measure as Fine Gael prepares to launch their election manifesto tomorrow, Fianna Fáil claims.

Micheál Martin's party has also set out 10 major policies and election promises they believe Fine Gael and the Labour Party stole from them ahead of the election and during the last Dáil term.

The list, seen by the Irish Independent, includes Mr Noonan's plan for a rainy day fund - which the party said it proposed in December - and Labour's grant for first-time buyers, which they say was outlined at Fianna Fáil's ard fheis last April.

However, it is Mr Noonan's plan to gradually reduce PAYE tax credits for those earning more than €70,000 after the Universal Social Charge (USC) is abolished from the tax system which comes in for the most severe criticism. Fianna Fáil points out that the minister rubbished an almost identical proposal when it was raised at a Finance Committee hearing after this year's budget.

Sinn Féin TD Peadar Tóibín said it was unfair that a person earning more than €100,000 would receive the same €1,900 tax credit as those on low incomes. "We simply believe that the tax credit should be reduced in a tapered fashion after €80,000," Mr Tóibín said.

The Sinn Féin plan would see the tax credit completely wiped out at €100,000.

However, Mr Noonan hit back at the time - and said it is not "operationally possible" to introduce such a system.

"Until such time as both the Revenue Commissioners and employers move to a real-time PAYE system and away from the current system of annual returns, the tapering of tax credits for employees would not be operationally possible," he said.

Fianna Fáil finance spokesman Michael McGrath said Fine Gael's tax policy is "completely undermined by Minister Noonan's own words".

"At a time when the tax system needs to be simplified, Fine Gael's plan relies on a very complicated series of clawbacks," Mr McGrath told the Irish Independent.

A Fine Gael strategist said introducing a new system to remove tax credits is a "political decision" which will be made by the next government.

"It's like any tax change, Revenue will always tell you they have to change their systems," he said.

Fine Gael is planning to increase Revenue staff by 200 to work on the new system and crackdown on tax cheats.

Fianna Fáil also claims Fine Gael's plan to raise €350m by hiking the price of 20 cigarettes by almost €3 over five years is at odds with advice from the Department of Finance.

Before this year's budget, the Department said raising tobacco prices too high will reduce consumption as more people are likely to quit smoking.

Fine Gael said it is policy to increase cigarette prices to reduce consumption.

Irish Independent

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