Tuesday 12 December 2017

Donohoe signals tax cuts for middle-income earners

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Niall O'Connor

Niall O'Connor

Finance Minister Paschal Donohoe has given a firm indication that middle-income earners are in line for income tax cuts in October's Budget.

Mr Donohoe yesterday said it is "unfair" that many workers are losing five out of every €10 in overtime in income tax.

He was responding directly to remarks made by his new junior Finance Minister Michael D'Arcy, who called for the entry point for the higher rate of tax to be increased.

In an interview with the Irish Independent, Mr D'Arcy called for the €33,800 threshold to be increased to €40,000.

Speaking at an event on public sector reform in Dublin's Pearse Street library, Mr Donohoe signalled that the entry point would form part of his focus ahead of Budget 2018.

"Minister Darcy has made that point to me that a growing issue is how we can make sure our marginal rates of taxation are affordable for everybody. What I don't believe is sustainable in a modern economy is to be in a situation that somebody on low to mid income, and earning €10 extra in, say, overtime, is taking home less than a fiver after they do that extra overtime," Mr Donohoe said.

"I do not believe that it is a sustainable or fair position for our economy to be in, in terms of how we look to address this. I agree with the objective of how we improve marginal taxation rates but I am many months away from finalising a budget and the wise thing would be for me to outline my plans on or near budget day as opposed to now."

Meanwhile, the Dublin Central TD reiterated the Government's commitment to a 2:1 split in terms of public spending and tax reform.

"I am increasingly aware though of the importance of affordable and sustainable taxation rates in the contest of the change that our economy is experiencing," he said.

He added that Brexit will be considered in the context of all reform measures.

Irish Independent

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