Taoiseach Leo Varadkar has brought back the possibility of the Government enacted a new, lower tax rate of 30%.
When Varadkar served as Tanaiste earlier this year, the proposal was discussed and could revert back thousands of dollars to workers’ pockets.
According to the Irish Mirror, it was rejected by Paschal Donohoe, the minister in charge of tax affairs, because it would lower the Exchequer’s tax revenue in the following years by tens of billions of euros.
During the yearly Taoiseach’s Christmas roundtable interview, Varadkar assured reporters that his controversial policy will be “discussed at Government level between now and the next Budget.”
“We want to help people somewhat with the cost of living, certainly, with a combination of pay rises and income tax reductions,” Mr Varadkar said, adding that this will help working people with the cost of living, “which is really important”.
“I believe that work should pay, and I think that in Ireland people have to pay the highest rate of income tax on very modest incomes. We’re getting to [a standard rate cut-off point] of €40,000 next year – I’d like to move that up. The policy objective that I have set is that we should get to the point where people can earn up to €50,000 a year without having to pay the highest rate of income tax.
“It might take a few Budgets to get there, but I’m determined that we should, whether we do it by increasing the standard rate cut-off point or by a middle tax rate [of 30pc]. I’m not hung up on that [the new 30pc middle tax rate] and I never have been. But that’s something obviously we’ll have to discuss at Government level between now and the next Budget.
“But certainly if the public finances allow it, I would like to see us continue on that road, so that you will be able to earn more without having to pay the highest rate of income tax. We’ve moved a long way in the last couple of years on that. And I want that to continue.”
The Taoiseach has also reiterated a Fine Gael pledge to raise the current higher tax threshold, where individuals should pay 40% of their income in taxes, to €50,000.
According to the Revenue’s most recent tax brackets, a single person without dependents pays 20% of income up to €36,800 and 40% of income over that amount in taxes.