Minister says middle-income earners are entering high rate of tax too soon
JUNIOR Finance Minister Simon Harris has again pledged to focus on low and middle-income earners who are entering the higher rate of tax too quickly.
The Government is under pressure to give something back in the October Budget after it was announced this week that tax revenue was €1bn ahead of target.
Finance Minister Michael Noonan has promised Budget cuts to be significantly less than the €2.1bn forecast at the start of the year and Mr Harris last night said any areas of 'flexibility' should benefit low and middle-income earners.
"I would reiterate the comments I've made, and indeed many senior ministers have made, which is that any flexibility within the Budget should be targeted at people who are working and entering the margin of higher rate tax at quite a low point," he said.
"People are paying 52pc tax on €32,800. Internationally that's quite low.
"I think if there is any flexibility on Budget day it should be targeted there, because it incentivises work. It rewards people moving from part-time to full time work ... I think it good for the economy and productivity within the economy."
But he also warned that the Government could not return to the mistakes of the past and said tax reform would be based on "economic realities" rather than "electoral considerations".
"Every measure that is taken in this Budget will be taken with a view to making sure economic growth is protected and enhanced, that jobs are created and that any flexibility that can be there should be directed at people who are working on low and middle-incomes and are paying a very high rate of tax at a very early point," he added.
Asked about comments by Mr Noonan yesterday that there may be some tax increases in next months' budget, the Minister for State said such a move will be considered by ministers in the coming weeks.
"Obviously the comments made by the minister is outlining the absolute reality that any decision made by Government in relation to the Budget on the tax side have to be paid for and it will be a decision for Cabinet over the next couple of weeks to look at that and explore the various options.
"While Minister Noonan has made it clear that €2bn is not likely to be there and the adjustment is likely to be significantly less than that, there's a number of difficult decisions government still have to make."