Minister wants to hike tax threshold to €40,000
Forcing workers to pay 50 cent out of every euro earned above €33,800 is both "shocking" and "unheard of", according to the new State minister at the Department of Finance.
Wexford TD Michael D'Arcy told the Irish Independent he believes the point at which workers enter the higher income tax bracket will be increased to €40,000 over a number of years.
As the Government steps up its preparations ahead of Budget 2018, Mr D'Arcy said the focus must be on making up for what he described as a "lost decade".
He said the "working middle" must be prioritised and the Budget must address the fact workers on modest incomes enter the higher rate of tax too early.
"In this jurisdiction, it's €33,800. That's unheard of," Mr D'Arcy said in his first major interview since his appointment.
"I think there are only two countries in the OECD when you hit our rate - of over 50pc - before that period. It is shocking people can be on the average industrial wage or thereabouts and hit the higher rate.
"It needs to be a lot higher than that if possible. That's not a mad right-wing philosophy," he added.
Pressed on what sort of new entry point should be introduced, Mr D'Arcy replied: "It's going to be between where it is and 40k over a period. And if we can do that it would be a hell of a good achievement, particularly for people in lower pay.
"Brian Lenihan brought everyone into the tax net through the USC, we've changed that, taken a lot of people out, which is appropriate."
The newly appointed minister said the Government needs to be cognisant of lifting the burden on those who "kept the country going" from 2008-2016.
"Leo used the term, the 'people who get up early in the morning'. It doesn't really matter what term you use. But it's the working middle that kept this country going during the difficult period from 2008-2012 and 2012-2016, those two blocks of four years. Those people need to be given the opportunity where they earn more, pay less and choose how they spend their own money."
Mr D'Arcy's remarks came as his boss in the Department of Finance, Paschal Donohoe, said the Government will ramp up public spending to ensure there can be more new teachers and nurses.
But speaking on RTÉ's 'This Week' programme, Mr Donohoe rejected suggestions the Government is pursuing a 'giveaway budget'.
"If we were focussed on the concept of a giveaway budget, to use your phrase, my starting point would not be to balance our books, it would not be to use the proceeds of AIB [share sale] to balance our books. And it would not be on how we begin focussing on capital investment spending," Mr Donohoe said.
The Dublin Central TD has said the Government aims to deliver a structural deficit of 0.5pc, which "would be equivalent to our country delivering a balanced budget". He said that by "balancing our books" the Government can make "accelerated progress on the things our citizens need".