Shifting income tax credits and bands will improve take-home pay, says Donohoe

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FINANCE MINISTER PASCHAL Donohoe said the government hopes to move income tax credits and brackets in the October budget to improve workers’ take home pay.

Speaking during Leaders’ Questions, the minister said that through tax indexation, “if there is an increase in overall wages to meet the significant challenge of the cost of living…we we just want to make sure that as much of this increase in overall wages as possible goes back into the stock market and the wallet instead of being absorbed by unintentionally higher levels of taxation”.

“That’s what we seek to do,” he said.

His comments come a day after Tánaiste Leo Varadkar said civil servants and those working in the private sector “will see that number at the bottom of the pay slip” increase after the October budget.

Varadkar suggested that a third income tax rate of 30% could help middle-income people.

He said it might be justified to have an average rate of 30% for people with middle incomes, so that the higher rate of 40% would only kick in for higher incomes.

Donohoe was responding to Labor leader Ivana Bacik, who said she was aware that under the current pay deal for public sector workers, a 1% pay rise in October with inflation now at 8% would effectively amount to a pay cut.

She called for investing in childcare and health care to reduce the huge costs that flow from people’s paychecks every week.

Tax cuts at the expense of public services

“We are a left-wing party, we believe in the need to ensure investment in public services for all and we do not believe in tax cuts for some at the expense of public services for all and that is our concern” , she added. .

Donohoe said he thought there could be common ground between Fine Gael and Labor on this issue, saying a personal taxation strategy seeks to ensure that if people get a pay rise this year, most of it ends up in their pocket, and not in the coffers of the State.

“No more, no less. It’s something that will be appreciated and needed at a time when the cost of living is such a challenge and so many people are under such pressure,” Donohoe said.

“If you were looking for real wage growth for workers who need wage growth, you would surely support a personal tax approach that simply aims to shift income tax credits and brackets according to growth. wages in our economy.

“That’s what we’re looking to do, that if workers, especially workers, who are on low to middle incomes, get the pay raise they need and deserve, and will need with the current rising cost of living. face, that they don’t see too much of that absorbed into higher levels of taxation as they earn more. I think there’s maybe more commonality between us on that,” Donohoe said.

In response to Bacik calling for the same level of ambition that has been shown during the pandemic on investment, Donohoe said it was not open to the government to maintain spending levels or investment levels. borrowing indicated during Covid.

“This was a unique time in our public and economic health. It was a unique period which fortunately is coming to an end as the disease is behind us, although still present it does not pose the fundamental challenge to our society and economy that it has posed in recent years,” he said.

Gasoline and diesel costs

Although the budget has been out for four months, there have been growing calls from those inside and outside government for action on the cost of living.

While Sinn Féin have called for a mini budget over the summer, those in Fine Gael are also looking for earlier action, with Senator Regina Doherty yesterday saying she wanted to see action as soon as possible given the urgency of the crisis people are facing. .

Kerry TD and Deputy Chief Government Whip Brendan Griffin also pushed Donohoe for further petrol and diesel price cuts in the Dáil today.

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He called for a further downward adjustment in fuel taxes as prices at the pump soar. While the Taoiseach and Tánaiste said chasing inflation was no good, Griffin said financial resolutions like this should be the new normal in a rapidly changing situation.

Griffin said fuel was up €2.20 on some forecourts.

“Unfortunately, the prices have gone up again. And I think there’s nothing wrong with the government adjusting and adapting as things change. And I’m asking, could you lay out the financial resolutions between here and summer vacation to try and help the beleaguered motorists who are feeling really pumped right now. It’s very, very expensive for people to get from point A to point B,” he said.

Donohoe said the excise cuts already put in place by the government are among the biggest excise cuts in place across Europe.

He said his goal remains to bring more support into the budget, saying the budget is the right time to do so. However, he said he would take into account the MP’s views.


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