Sunday 16 December 2018

Varadkar says he can give €3bn tax cut and spend too

Taoiseach Leo Varadkar at the Fine Gael ard fheis at the weekend. Picture: Frank McGrath
Taoiseach Leo Varadkar at the Fine Gael ard fheis at the weekend. Picture: Frank McGrath
Laura Larkin

Laura Larkin

Taoiseach Leo Varadkar is defending his new tax policy of promising a major giveaway for middle-income earners.

In a move reminiscent of Celtic Tiger-era party conferences, the Fine Gael leader told his Ard Fheis that if re-elected he will cut tax bills by up to €3,000.

By raising tax bands over five years, the Taoiseach pledged to bring the rate at which workers start paying the top rate to €50,000.

At present, people can earn up €35,550 before being hit with the higher tax rate.

The move would see an additional €3,000 in the pocket of someone earning €50,000 who would pay 20pc on their entire earnings at the end of the five years under the proposals.

The move would cost €600m per year and benefit 920,000 workers.

Fine Gael has drawn ire from the Opposition for "electioneering", but Mr Varadkar rejected suggestions the move was straight out of Bertie Ahern's election strategy.

He defended the policy and said it was contingent on a growing economy and was necessary to remain competitive in a post-Brexit era.

Mr Varadkar said he was happy to stand over a policy that would ease the tax burden on middle-income earners.

He said the Government will be able to invest in services and in areas such as housing and health in addition to introducing the tax break.

"We will find some space to give Middle Ireland a tax cut…they deserve it... we think it makes good economic sense as well," he said on RTÉ's 'The Week in Politics' programme.

In a separate interview he also continued to ramp up the pressure on Fianna Fáil over the ongoing negotiations on a renewal of the confidence and supply deal between the parties.

An independent review of the procurement process for the National Broadband Plan is due this week and it is expected to form a key part of negotiations between the parties in the coming days.

Fine Gael's senior ministers used the ard fheis to try to turn up the heat on Micheál Martin's party to end the review period of the current deal and move into the negotiations on the next one.

It came against a backdrop of the party proclaiming itself election ready, with Justice Minister Charlie Flanagan noting the printing machines are "well oiled".

However, senior Fianna Fáil figures retaliated by slamming the unwillingness of Fine Gael to conduct a review looking back on progress over the lifetime of the deal in key areas such as health and housing.

Fianna Fáil deputy leader Dara Calleary told a dinner for members that if Mr Varadkar wanted a blank cheque to continue in power he would have to "write to Santy" to get one.

Mr Varadkar claimed if both parties really wanted to do a deal it could be done in a weekend.

He accused Fianna Fáil of "dragging their feet" and said the country needs stability in the face of Brexit which is at a crucial stage.

However, Mr Martin's party rejected this suggestion.

"Fianna Fáil cannot understand why the Taoiseach and ministers seem to be afraid of, or are trying to dodge, this review. They seem to be only interested in discussing a two-year extension and want to be given a blank cheque," a party spokesperson said.

Irish Independent

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