Wednesday 13 November 2019

FF wants answers on how rich pay less tax than average worker

Follow up: Fianna Fáil finance spokesman Michael McGrath. Photo: Tom Burke
Follow up: Fianna Fáil finance spokesman Michael McGrath. Photo: Tom Burke
John Downing

John Downing

The Government is to be pressed to explain how some of Ireland's wealthiest people pay less income tax than the average worker.

The move by Fianna Fáil follows a report by the Comptroller and Auditor General which revealed that 90 of the country's wealthiest people use various reliefs to pay tax at a lower rate than the average worker.

Many of them declared an actual income of less than the average industrial wage of €36,572 a year.

Fianna Fáil finance spokesman Michael McGrath said yesterday that he would be pursuing answers on the issue.

However, he says it will not be a factor in his Budget talks, which resume tomorrow with Finance Minister Paschal Donohoe.

Mr Donohoe will deliver his Budget on October 9.

He and Mr McGrath are locked in a battle over how expected small tax cuts in Budget 2019 will be implemented.

Fianna Fáil wants to see reductions in the Universal Social Charge, to favour lower earners.

Fine Gael is instead keen to raise the point at which workers reach the higher 41pc rate of tax, a move which may benefit those on slightly higher incomes.

Government sources have already indicated that the Revenue Commissioners are looking at the issue of wealthy people managing to avoid income tax.

Mr McGrath said that the matter was likely to be the focus of talks about tax regulations and would feature in discussions on the Finance Bill, which underpins and implements the annual Budget.

"Yes, we need answers on why the situation could arise whereby wealthy people pay less income tax than ordinary workers," Mr McGrath told the Irish Independent.

"But I do not expect it to be part of Budget negotiations."

The final touches to the Budget 2019 package will be completed in the coming days.

Last week, it emerged that there were tensions between Mr Donohoe and Fianna Fáil over his insistence that the threshold at which a worker pays the higher rate must be raised.

Taoiseach Leo Varadkar told the Dáil that once pensioners and students were taken out of the reckoning, most workers were on a gross income of €44,000 a year. He said it was wrong that such people should have the benefits of a pay rise, increment or overtime halved due to tax.

The Independent Alliance members of Government are also due to meet to finalise the items they are seeking.

These are understood to include an exemption from the Local Property Tax for pensioners on low incomes.

It is understood that the minister responsible for the OPW, Kevin Boxer Moran, is looking for an increase in the fuel allowance.

He is believed to be citing the hardship that was endured by people on low incomes last year due to the prolonged severe weather.

At the same time, TDs will today get a 1pc pay rise which will bring their total salary to about €94,500.

The rise forms part of the agreement between the Government and public sector unions on pay restoration.

Irish Independent

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