Noonan to ease tax burden on families with targeted cuts
Published 01/03/2014 | 02:30
THE Government is lining up a series of tax cuts before the next general election, the Irish Independent understands.
But the initial focus remains on raising the point at which people hit the higher rate of tax and not cutting the Universal Social Charge.
Finance Minister Michael Noonan is expected to refer again today at the Fine Gael Ard Fheis to the prospect of "targeted tax reductions" that help create jobs in this year's Budget.
Fine Gael is clearly indicating the reduction in the tax burden will be directed at pushing up the point of entry into the marginal rate of tax above €32,800.
Any money earned above that point is taxed at 52c out of every euro, between income tax, USC and PRSI rates combined.
Mr Noonan has repeatedly said the income tax burden is too high and needs to be reduced – a sentiment echoed by Taoiseach Enda Kenny and Tanaiste Eamon Gilmore.
The Labour Party has put a child tax credit, which would directly benefit parents, on the table.
But Fine Gael is understood to be less keen on tax credits as a means to ease the burden.
Both parties want the benefit to go primarily to the so-called squeezed middle of families on medium-sized salaries with mortgages and the cost of rearing children.
Fine Gael is satisfied to go for the income tax threshold, although a change there would benefit high earners too.
"It won't be a straight-up tax cut. You're probably looking at a widening of the thresholds. That's where the minister's head is at. By shifting up the threshold, you are carrying out a targeted measure for middle income earners. As a proportion of their income, it's of much smaller benefit to high earners," a source said.
But the party's economic advisers regard the USC as having a wide tax base which does not allow the wealthy to avoid payment through the use of tax reliefs.
"The USC is actually incredibly fair as it does come in at quite a low rate and then continues on from there to high earners. Everyone should pay some tax so you do have a stake in every election," a source said.
Mr Noonan will link future cuts in the tax burden to the VAT reduction in the Government's first jobs initiative, the plan for small businesses and measures in the last budget.
Mr Noonan will also indicate he is not just talking about Budget 2015 when he speaks of tax cuts as there are further opportunities "in the years ahead".
The minister's comments will be viewed as another signal the Government is planning to roll out a series of tax reductions.
Mr Noonan will also re-iterate the promise to reach full employment by 2020 and to eliminate the budget deficit by 2018.
Taoiseach Enda Kenny's keynote address tonight is also expected to touch upon the possibility of easing the tax burden, if circumstances allow.
Moreover, Fine Gael will seek to put a message across that progress had been made in its three years in Government, but the recovery is not being felt by everybody.
The party will also acknowledge further work is required on job creation, banking reform and starting up businesses.
Fine Gael will again refer to 2014 as the year for focusing on jobs, with a particular emphasis on the domestic economy, including agriculture, tourism and retail.
The party is gearing up for the local and European elections, so Mr Kenny is also expected to refer to the need for efficiencies at council level and the importance of having influence in the EU.
Next week, Fine Gael hosts the conference of its EU grouping, the European People's Party, in Dublin.