Tax rate too high for those on €32,800, admits Noonan
Finance Minister Michael Noonan has admitted that people with annual incomes of €32,800 should not be hit with the top rate of tax
The low income threshold where taxpayers here get hit with the top 41pc rate is a "tax on jobs", he said.
Lifting the income threshold where the higher rate kicks in is likely to be the focus of any cut in personal tax in Budget 2015, he said at a speech in Dublin yesterday.
Taxpayers here pay the highest tax rate once they are earning over €32,800 a year for a single person.
Overall tax rates here are not unusually high, but the income level where the top rate applies is "out of step" with other countries such as the UK, Mr Noonan said.
"If I have money I will widen that out," he said.
The comments are the clearest indication yet that any tax cuts next year will focus on lifting the lower limit of tax bands, not on reducing the universal social charge or changing the actual tax rates.
Michael Noonan said the Government was likely to face increased pressure to reduce tax, following the end of the bailout.
But cuts will only be made if they can be afforded, he said.
His priority for any reduction is that they are done "in a way that will have an effect on jobs and the labour market".
That was the reason for VAT reductions which boosted the tourism industry and for changes to stamp duty aimed at encouraging farmers to pass land on to the next generation, he said.
The decision taken exactly a year ago to scrap the 'Anglo Irish Bank Promissory Note', was the "key event" that triggered the improved conditions now felt here, the minister said.
The economy remains "fragile" and there may be a need to create a new kind of industrial relations forum to manage disputes between workers and employers before they spiral into strike action, he said.
He named VAT reductions to support tourism and stamp duty reductions to encourage farms to be passed to the younger generation as previous jobs-focused tax initiatives.
Further spending adjustments are required in the Budget for next year, which will be achieved through a 2-to-1 ratio of cuts to tax increases, he said.
On the corporate tax regime the minister said setting both personal and corporate tax rates are matters for sovereign states alone, under the terms of the European treaties. But he said "those hearings on the Hill" in the US where Ireland's tax regime came under scrutiny from political leaders had hurt Ireland's reputation.
The minister made the comments at a lunch for the Association of European Journalists.