Tuesday 20 March 2018

Donohoe backed by FF in bid to slash income tax

Minister for Public Expenditure and Reform Paschal Donohoe TD Picture: Tom Burke
Minister for Public Expenditure and Reform Paschal Donohoe TD Picture: Tom Burke

Niall O'Connor and Kevin Doyle

Fianna Fáil's most influential TDs have rowed in behind Public Expenditure Minister Paschal Donohoe's plans to slash tax as part of Ireland's response to Brexit.

Mr Donohoe's call for a reduced tax burden for workers has kicked off the negotiations ahead of Budget 2018.

As British Prime Minister Theresa May prepares to trigger the Brexit negotiations as early as this week, Mr Donohoe insisted our marginal tax rate of 49.5pc is putting Irish jobs in jeopardy.

Fianna Fáil last night expressed its support for tax cuts in a move that will come as a boost to Fine Gael.

However, a potentially significant sticking point has emerged over the delivery of tax cuts in the budget.

To date, Fine Gael ministers have said their focus is on scrapping the Universal Social Charge (USC) by 2021.

But Fianna Fáil's finance spokesperson Michael McGrath told the Irish Independent that changes to income tax thresholds, rather than Fine Gael's preferred option of cutting the USC should be pursued. At present, people begin paying the higher rate of tax on incomes above €33,800.

"That entry point needs to be increased significantly. It will be of much greater benefit to many thousands of families," Mr McGrath said.

And his colleague Dara Calleary, the party's public expenditure spokesperson, warned against any strategy that trumps the need to improve services such as healthcare.

"We acknowledge the need for a reduction in personal taxation but we will always ensure there is focus on better services," Mr Calleary said, adding that Mr Donohoe was a member of a government that "drove inequality".

Mr Donohoe's decision to shift the focus back on to taxation will heap pressure on some of the Fine Gael leadership contenders.

In an article in the 'Sunday Independent', Mr Donohoe said it is "not sustainable to keep jobs we have or to attract new talent if you keep less than half what you earn above a relatively low income level."

As the battle lines for October's Budget are drawn, Taoiseach Enda Kenny said the negotiations over Britain's exit from the EU could extend beyond the planned two year period if necessary. He said a time extension could be granted if the European Council votes unanimously.

Speaking in Philadelphia, Mr Kenny said it was not a concern that most of the Irish Cabinet is abroad for St Patrick's Day.

And he confirmed that Mrs May refused to commit to a date for triggering Article 50 when he spoke to her in Brussels last Thursday.

"The European Union will respond to that (Article 50) and will issue guidelines within 48 hours if it is triggered next week. The meeting of the European Council to approve the negotiating stance of the European Union and the guidelines to be adopted will be on April 6," Mr Kenny said.

Irish Independent

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