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Saturday 20 September 2014

No income tax rises in next Budget, vows Hayes

Michael Brennan Deputy Political Editor

Published 05/01/2013 | 05:00

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FINE Gael's Brian Hayes has insisted that there will be no income tax rises in the next Budget despite a pre-Christmas row with Labour over hitting higher earners.

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The junior minister appeared to scratch old wounds as he broached the subject of income tax which has been a bone of contention for the Coalition.

But he denied that it was a warning to Labour TDs to stop demanding rises in these taxes ahead of the next Budget.

And the junior minister for the Office of Public Works admitted that even without increases in income tax, there were still going to be other tax rises in the next Budget.

It comes after a serious coalition row during the recent Budget negotiations, with Fine Gael threatening social welfare cuts if Labour insisted on increasing tax on people earning over €100,000.

Mr Hayes gave taxpayers some hope with comments about reaching "virtually the end of the income taxation side" and not "taxing the hell out of people".

He told the Irish Independent that his remarks were not directed at Labour, but that it was evident income tax now accounted for 40pc of the entire tax take and was high compared with other countries.

"If you are trying to keep 1.8 million people at work and get more people back to work, you can't continuously increase income tax," he said.

But with a target of €1.1bn in extra tax revenue, some sort of hikes are inevitable in the next Budget. And it is already clear that under the bailout deal, water charges are due to be introduced next year.

But Mr Hayes said half of the amount of extra tax required had already been raised through tax hikes in the current Budget.

"We're getting to the end of the taxation debate. Certainly it is important for getting confidence among people in terms of their spending," he said.

The Government's other key pledge is to maintain the basic social welfare rates, which Mr Hayes said he hoped would also be met in the next Budget.

Despite Mr Hayes' comments, Labour Dublin Mid West TD Joanna Tuffy said she believed there was still scope for raising income taxes on people earning over €100,000.

She said a 1pc increase in their Universal Social Charge would bring in €67m.

Labour is still under pressure from the trade union movement in the wake of the Budget, which included a €5 hike in weekly PRSI for workers earning over €18,000.

SIPTU president Jack O'Connor, who has served on Labour's national executive in the past, called for the Government to reduce the burden on working families. He said that taxes could be increased on higher earners with pensions worth over €60,000 by abolishing their pension tax relief this year rather than next year as planned.

Fianna Fail jobs spokesman Dara Calleary said his party did not want any further tax increases on middle-income earners. But he said those earning over €200,000 could pay more to support the economy.

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