'Perfect storm' as Budget tax hikes take hold
More than 91,000 PAYE workers will move from the lower 20 per cent standard rate of tax to the top 41 per cent rate because of changes in last month's Budget, the Sunday Independent can reveal.
This week, thousands of workers will see the impact of the Budget tax increases in their pay packets with average-wage couples likely to have their net income cut by €140 a month.
As a result of the widening of the tax bands and the introduction of the new universal social levy, workers on the top rate are now paying an effective tax burden of 52 per cent.
More than a 140,000 middle and lower income PAYE workers will be particularly affected by changes in the budgetary arithmetic.
Figures secured by Labour finance spokesperson Joan Burton from the Department of Finance reveal that from this month just over 91,000 PAYE workers will move from the lower 20 per cent standard rate of tax to the top 41 per cent rate.
The figures also show that a further 53,000 lower paid workers will, in the aftermath of Finance Minister Brian Lenihan's Budget changes, move from not paying any tax to the lower rate. This move by Mr Lenihan is to widen the tax base and end the scenario whereby 50 per cent of workers didn't pay any tax.
Many government backbench TDs last week were anticipating a major backlash from the public because of the reductions to people's net income which has now begun to show up in workers' pay packets.
Speaking to the Sunday Independent Ms Burton said that "ordinary workers were experiencing a perfect storm''. She added that "these swingeing hikes for ordinary citizens'' were another example of how the Fianna Fail-led Government was making ordinary people pay for the banking bailout by stealth.
From this month onward, a single person earning €55,000 a year will take an extra hit of €24 a week or €1,249 a year. For a single person earning €100,000 a year, the hit will be €37 a week or €1,934 a year. For a married private sector couple with one income and no children earning €55,000 a year, the extra tax hit will be €27 a week or €1,429 a year. For a couple earning €125,000 a year it will be €51 a week or €2,643 a year.
For a private sector married couple with two children earning €75,000 a year, they will see their income reduced by €35 a week or €1,815 a year. For a couple earning €150,000 a year, their pay packets will be reduced by €63 a week or €3,283 a year.