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Government set to target tax cuts for middle income earners in budget

Minister for Public Expenditure Michael McGrath hinted that plans are underway to introduce a new tax bracket.

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Michael McGrath has revealed plans to create a new tax bracket (Brian Lawless/PA)

Michael McGrath has revealed plans to create a new tax bracket (Brian Lawless/PA)

Michael McGrath has revealed plans to create a new tax bracket (Brian Lawless/PA)

The Minister for Public Expenditure has indicated that the Government is set to target tax cuts for middle income earners in October’s budget.

Michael McGrath hinted that plans are underway to introduce a new tax bracket as part of the budget plans.

He told the Dail that there will be a set of tax measures that will see a reduction in income tax for people who earn “modest levels” of income.

Mr McGrath said: “It is important that we, as well as addressing the cost of living measures through expenditure, do have a tax package in the budget.

“We have a Programme for Government commitment that we will honour, because what we don’t want is a situation where the constituent that you highlighted, ends up getting a pay rise or does some overtime, and then is paying half of that in tax because he’s crept into the marginal rate of income tax.

“If you have a static tax system at a time of rising incomes, that is equivalent to an increase in tax and it seems to be only on this side of the House that there is support for (a) reduction (in) income tax for people who are earning quite modest levels of income, in the mid-30s in terms of thousands.

“I’ve acknowledged it and we are going to make an intervention in the normal annual budget. We will also be focused on a set of measures that could kick in as quickly as possible, that will be temporary and one-off in nature.

“The advice that we have received from all the main bodies is to target resources, insofar as we can, to those who need it most and work is now actively underway on preparing that.”

People can't afford to put food on the table, heat their homes, fuel their cars, put shoes on their children. Peter Fitzpatrick, independent TD

He made the comments in response to Independent TD Peter Fitzpatrick who told of how a constituent, a young father-of-two, could not afford to feed his family because of the rise in the cost of living.

“I am not going to say that the Government has done nothing, but I’m going to say that the Government needs to do more,” Mr Fitzpatrick said.

“In my consistency office in Dundalk, I listened to my constituents, and what is happening on the ground.

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“People can’t afford to put food on the table, heat their homes, fuel their cars, put shoes on their children.

“Afraid to put on the cooker and washing machine, panicking they won’t be able to buy books or uniforms for their children.

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Mary Lou McDonald said the Government ‘did not get’ the cost-of-living crisis (Brian Lawless)

Mary Lou McDonald said the Government ‘did not get’ the cost-of-living crisis (Brian Lawless)

Mary Lou McDonald said the Government ‘did not get’ the cost-of-living crisis (Brian Lawless)

“A young married man with two children came to my office last Friday, crying as he can’t afford to look after his family.

“He goes to work in Dublin every day, five days a week. The fuel price has doubled and he can’t cope anymore. The word he used was enormous pressure.”

Sinn Fein president Mary Lou McDonald again called on the Government to bring in an emergency budget before the summer recess.

She told Mr McGrath that struggling families cannot wait until October.

“There are people who are literally only one bill away from going over the edge, one rent payment away from going under,” Ms McDonald said.

We think it will peak in the short number of months ahead but we cannot be certain of thatMichael McGrath, Minister for Public Expenditure

“People who work very long hours and who can’t afford the basics. This is the hard reality of people’s lives and despite everything that you might say, Minister, clearly your Government doesn’t get it.

“In fact, it is incredible to hear the Government congratulate itself over and over for having done so much when clearly so much more needs to be done.

“Minister, children as you know head back to school in late August, early September, not October, and those families face astronomical costs now.

“Energy companies aren’t going to give customers a break between now and October.

“Rip-off electricity bills will keep coming through the summer months, people go to fill their cars every week between now and October and by the way, they’re paying more than two euros a litre today.

“This is all happening now.

“So asking people to wait until October for help is asking them to wait for disaster. An emergency budget is a sensible and necessary response at this time.”

The Government is to publish its summer economic statement next week, and the mid-year Exchequer position, which Mr McGrath said will set out the resources available to Government.

“It is quite possibly the case that as a country, we may face a prolonged period of high inflation,” Mr McGrath added.

“We think it will peak in the short number of months ahead but we cannot be certain of that.

“Monetary policy is changing internationally as well and the global economic outlook is deteriorating.

“So we need to use the limited resources that we have wisely and we have to time our further interventions to have maximum impact and it is our view that people will most need further help come the autumn and into the winter period and we will need at that time a set of measures that can have an impact quickly.

“It will, in particular, be targeted at those who most need the help in respect of one-off measures, temporary measures and so on.”


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