Days after Budget Donohoe says tax rates are 'unsustainable and unfair' as he pledges progress
- Minister says move would safeguard jobs
- First of a number of steps that we can afford over the long run
- 'There wasn't anybody chanting my name after Budget speech'
Ireland's income tax rates are "unsustainable" and will be repeatedly reduced in the years ahead if Paschal Donohoe remains as Finance Minister.
Just days after delivering his first solo Budget, Mr Donohoe described the tax system as "not fair" and "not sustainable".
Acknowledging that the income tax and USC cuts in the Budget were small, he indicated more will follow.
"What I'm saying here is that this is the first of a number of steps that we can afford over the long run.
"I do not want to be in a situation where the big tax cut of one day is the savage tax increase of the day afterwards."
Mr Donohoe's comments at the Independent News and Media Budget 2018 business breakfast are likely to draw criticism from some Opposition parties who believe he was wrong to introduce any tax cuts in the Budget.
Earlier this week, the minister announced plans to increase the threshold at which workers pay the higher 40pc rate of income tax by €750 to €34,550.
He also reduced the two middle rates of the Universal Social Charge, with the net effect that a worker earning €55,000 will be €6 a week better off from January.
"I've been crystal clear since I took over this job that the key thing I want to address in personal taxation is the unsustainable position that we're in that if you're on an average wage in this country you're already on the higher rate of income tax," Mr Donohoe said.
"We have to make progress in this. It's not fair, it's not sustainable that people I represent in my constituency who are on very average earnings are already on a marginal rate of taxation of between 46pc and 48pc."
The minister said he had no intention of taking more people out of the tax net.
- One in three employees currently pays no income tax because their earnings are low.
"I'm not going to put in place any move that's going to narrow our personal tax base," he said.
The Government of Fine Gael and Independents has one more budget under the confidence and supply arrangement with Fianna Fáil.
Up to €3bn is expected to be available for tax cuts and spending increases in Budget 2019, compared with the €350m set as a base for next year.
Mr Donohoe indicated that he believes the country will start to lose jobs unless the tax rates are reduced - but this reform will be on a gradual basis.
"We did go through a period where, when we passed a budget, the next morning people felt better-off.
"Colleagues were comparing the atmosphere in the Dáil to some of the budgets in 2003 and 2004 when the minister for finance used to walk into the Dáil bar and have his name chanted," he said.
"When I walked into the bar in Leinster House on Wednesday night, there wasn't anybody chanting my name.
"The reason for that is that I was very clear that if we're making steps forward on taxation, they have to be ones that I can afford to do and that the Irish economy can afford to do," he said.
Mr Donohoe was speaking in front of an audience of business leaders including KPMG managing partner Shaun Murphy, new Dublin Airport Authority chief executive Dalton Philips, Digicel founder Denis O'Brien, Permanent TSB chief executive Jeremy Masding, Lidl Ireland chief executive JP Scally, former Fitzwilton chairman and INM director Dr Len O'Hagan, and INM Editor-in-Chief Stephen Rae.