High tax rate 'forces young professionals to emigrate'
JUNIOR Finance Minister Brian Hayes has warned that Ireland's higher rate of income tax is a major factor in the exodus of young professionals from this country.
Mr Hayes has become the latest Fine Gael minister to demand a consecutive cut in the income tax in the next two budgets.
"Our current rate of tax is a huge disincentive for people to stay in Ireland and work and is encouraging a brain drain of young professionals," Mr Hayes said.
"Our very high tax rates on very modest incomes must be reversed. Young workers deserve a break," he added.
His comments come just days after Mr Noonan clearly signalled that he is preparing to raise the band at which workers pay the higher rate of income tax.
Confirmation that the Coalition favours tax cuts over wage increases has proved a thorny issue in recent weeks, particularly among union leaders.
SIPTU President Jack O'Connor said last month that the "key to intensifying the momentum in the economy must be pay increases".
His remarks are at odds with those expressed by a number of government ministers who are very cautious about even discussing the prospect of wage increases.
Mr Hayes, who is Fine Gael's European candidate in Dublin, said he believed tax measures in October's Budget must benefit those who pay the higher rate of income tax.
"We need to keep our best and brightest here in Ireland making a contribution to their own country – not Australia, not Canada, not the US," he said.
Government sources insist that Finance Minister Michael Noonan will examine how to "ease the burden" on middle-income earners, particularly those with children.
They insist that changes to the Universal Social Charge (USC) are also on the table ahead of the Budget.
But Mr Hayes said yesterday that, while he favours changes to USC, the immediate focus must be on income tax.
At present, workers pay a marginal rate of 52pc on every euro earned above €32,800.
Mr Hayes, a Dublin-South West TD, said this was a factor in the flow of young people who were being lost to emigration.
"Trade union officials and other economic commentators have been calling for an economic stimulus. The best and fairest economic stimulus of all is a tax cut," he said.
"Supporting jobs growth must remain the clear focus of Government; tax breaks for people at work is the logical next step.
"The easing of the tax load on middle-income workers is a priority for this Government.
"If we continue to control current spending then we can give back to working people more of their own hard-earned money.
"Tax breaks for working people keeps the economy competitive and encourages more employment," said Mr Hayes.