Sunday 22 July 2018

Middle-income tax cuts on cards in the Budget - Varadkar

Pledge: Taoiseach Leo Varadkar. Photo: PA
Pledge: Taoiseach Leo Varadkar. Photo: PA
Laura Larkin

Laura Larkin

Middle-income earners are set for a tax cut in the upcoming Budget as Fianna Fáil has said it is open to discussing reductions beyond what is allowed in the confidence and supply agreement.

Taoiseach Leo Varadkar has again pledged to cut taxes for middle Ireland and despite taking a strong line on limiting tax breaks in the final budget of the agreement, Fianna Fáil has said it is open to relief for workers.

But it is likely any scope for tax savings for voters will be limited as Fianna Fáil is set to push for targeted measures to tackle the cost of living, including in relation to housing and childcare.

"What we did in the last two budgets is very much prioritise investment in public infrastructure and public services ahead of tax cuts, but there does need to be some room for tax cuts, particularly for middle income earners who hit that higher rate on such modest incomes, so I'm happy with that principal (the 2:1 split) continuing," Mr Varadkar said.

The confidence and supply agreement which underpins the Government allows for USC to be reduced and limits the Government to a 2:1 split in relation to investments in public spending and tax cuts.

Fianna Fáil has stated it does not want the Budget to be used to deliver tax cuts at the expense of meaningful investment in public services, but the party is open to additional cuts to tax bills. The party's public expenditure spokesperson Barry Cowen said that ahead of budget negotiations the party is keen to secure investment in health and housing.

But he noted that last year's budget managed to include small tax cuts in the 2:1 split, and if there are similar proposals this time around they will be given due consideration, he said. However, he warned "people want to see something more meaningful than €2 in their pocket".

"Our focus remains on seeking to use the Budget to implement outstanding items in the confidence and supply with emphasis on housing, health and the cost of living," he told the Irish Independent.

There is a cohort of people struggling to meet their monthly costs and "measures to target that might be more beneficial than a tax cut for the sake of it," Mr Cowen said.

However, the negotiations may yet be derailed over the issue of extending the confidence and supply agreement.

The leaders of Fine Gael and Fianna Fáil are due to meet next week to "review" the agreement and discuss priorities for Budget 2019.

Mr Varadkar has said he does not want a 'cliff-edge' scenario after the Budget, but Mr Martin is holding firm that the deal be discussed at the end of the year.

He also raised the prospect of refusing to extend the deal by saying the "idea that a government can't do its job unless it has a guarantee of an extended term is palpable nonsense".

When asked if a failure to renegotiate an agreement ahead of the Budget in October was grounds for an election, Mr Varadkar failed to rule it out, saying: "We'll cross that bridge when we come to it.

"The focus of Government now is absolutely on the job....that's my focus now, not elections."

Irish Independent

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