Saturday 22 October 2016

Editorial: Some real action on tax breaks, please

Published 13/02/2014 | 02:30

Taoiseach Enda Kenny. Photo: Collins
Taoiseach Enda Kenny. Photo: Collins

THE propensity of various leading government figures to dangle the prospect of potential future tax cuts must leave people wondering whether this is a matter of political expediency in the run-up to elections, or a genuine attempt to alleviate the plight of working people.

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Taoiseach Enda Kenny returned to the theme yesterday at a major IBEC conference in Dublin, conceding that the top rate of tax was reached "at too low a level".

In other words, low-paid workers are sucked into the highest rates of tax far too early.

A single person reaches this threshold once they earn over €32,800 a year.

This hardly comes as a revelation – indeed it has been a theme of successive governments who never did anything about it.

Tanaiste Eamon Gilmore and the Finance Minister Michael Noonan have also alluded to this burden over recent weeks.

"Clearly it's a priority for government and will be evaluated and analysed as we make preparations for the Budget in October," Mr Kenny added yesterday.

However, it is clear that with local and European elections in mid-year, Mr Kenny and other members of his government are holding out the prospect of a 'treat' in the autumn, and it is one that they will have to deliver on, now that expectations have been raised.

The need for a government plan to reduce tax rates "over time" has also been on the mind of the outgoing head of the IDA, Barry O'Leary. "There is no doubt about it, the effective tax rate in Ireland has become much too high. It is placing more competitive pressures on Ireland," he said last December.

Mr O'Leary believes that such high tax rates are counter-productive when it comes to attracting foreign direct investment to this country.

Ultimately, with the troika now off its back, the Government is in a position to deliver some respite from austerity to the hard-pressed taxpayer. But they will have to be mindful that tax reduction is now a promise – and one the electorate will expect to be delivered on, even though the economic cycle has a long way to go before Budget Day.

Irish Independent

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