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Third income tax rate of 30 percent on budget table to ease pressure on families

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A third income tax rate of 30 percent is still being considered in budget negotiations. Tánaiste Leo Varadkar’s proposal for the new tax rate is currently under review by the Ministry of Finance and will appear in tax strategy papers to be published soon.

The annual overview of potential tax measures is published before the budget and gives ministers options on the cost of raising or lowering taxes.

Mr Varadkar asked Finance Minister Paschal Donohoe to look into whether a new rate could be introduced. Mr Donohoe has not released details of the tax rate review, which would aim to lower taxes on middle-income earners.

“It’s definitely under consideration but it’s not definitely going into the budget just yet,” a Fine Gael source said.

Mr Varadkar first proposed introducing a tax margin of 30 percent in a speech to the Institute for International and European Affairs in March.

“We are providing around €500m in every household to reduce the income tax burden, particularly for middle-income people, because people in Ireland pay the highest rate of tax on very modest incomes,” Mr Varadkar said at the time.

Meanwhile, Taoiseach Micheál Martin said families will see near-immediate benefits from a special living allowance package due to be introduced in September.

He announced that a package to ease the financial pressures on families would be introduced next month alongside the budget.

The Taoiseach said this week’s Treasury Department figures showed a surplus of 5 billion euros, which he described as good news for the country as it gives the government an opportunity to address “pressures on families”.

“It is good news that despite the challenges related to the overall cost of living internationally, revenues have remained strong,” said Micheál Martin. “There are key sectors of the economy that are still doing very well, foreign direct investment and so on that are increasing revenue.

“Flying income figures give us the opportunity to relieve people in the household and in September the cost-of-living package.”

Speaking at Dún Chaoin at the Blasket Island Center in West Kerry, Mr Martin said the Government intended to introduce a budget with a “cost focus in relation to tax breaks”.

“Parallel with [the Budget]there is a separate living expenses package, elements of which will apply this year, and people will feel the benefits of that package before the end of this year and in some cases immediately, to ease the pressure that is no doubt on many households across the country because of the energy crisis,” he said.

Mr Martin said the energy crisis was due to the war in Ukraine and “Russia’s arming of energy, food and migration”.

The government is also considering the possibility of an unexpected tax on energy companies’ high profits.

“The government will look at a number of issues and look at the issue of the windfall tax,” he said.

“We want significant investments in renewable energy in the future, but I think overall there will be significant gains and we will look at that in the context of the budget.”

He said the government is already taking a dividend from state-owned companies like the ESB.

As part of the budget negotiations, various one-off measures to deal with the cost-of-living crisis are being examined.

A further credit for electricity bills is expected after giving every household in the country €200 earlier this year.

There will also be an extension and possibly a doubling of heating subsidies for people struggling with their heating bills.

The one-off measures will be announced on Budget Day, September 27, and unlike other directives, will come into effect immediately rather than in the new year.

https://www.independent.ie/irish-news/politics/third-income-tax-rate-of-30pc-on-the-table-for-budget-to-ease-pressure-on-families-41890944.html Third income tax rate of 30 percent on budget table to ease pressure on families

Fry Electronics Team

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