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THE MINISTER FOR Finance Michael McGrath has ruled out the introduction of a 30% income tax rate in this year’s Budget but said workers can expect some changes to tax bands.
The idea of a third rate of income tax between the standard rate of 20% and the higher rate of 40% was suggested by Taoiseach Leo Varadkar and Fine Gael ahead of last year’s Budget.
However, the idea was met with some resistance from within Government with the Green Party opposing it and Fianna Fáil offering a tepid reaction.
Speaking to reporters in Dublin today, Minister McGrath said it would not be possible to introduce a third tax band in this year’s Budget.
“You can’t implement it in January 2024. That is absolutely the case because it does require extensive change to revenue systems and would need a long lead in period,” Minister McGrath said.
“But we will be setting out on Budget day what are the pros and cons and we will have more to say on Budget day in relation to the possibility of a third rate of tax,” he added.
The Government intends to publish a review of the personal taxation code (which will include an examination of the potential for a third rate of income tax) on Budget day.
“There are pluses and minuses of bringing in a third rate of income tax and the Taoiseach himself has acknowledged that,” McGrath said.
“The main obvious benefit is that it is a bridging rate from the standard rate of 20% and the higher rate of 40% but there are downsides too in that people who earn less than the entry point don’t benefit at all.”
He also said the impact on certain tax reliefs, including pension tax relief, needs to be taken into consideration.
With three weeks to go to the Budget (10 October), McGrath told reporters today that he wants to be realistic with people and that the Government will not be able to meet everybody’s demands.
“I always believe that you’re far better to try to surprise people on the upside rather than raising expectations in the weeks leading up to a Budget and then falling short,” he said.
McGrath said the Budget will be centered on the Government’s priorities which are housing and supporting people with the cost of living.
In relation to temporary one-off measures in the Budget – such an the energy support payments made last year – the Minister said he agrees with the Taoiseach that the level of one off measures should not be on a scale comparable with last year.
He said this is because the environment is different and inflation is falling.
Last year, one-off measures included in the Budget totalled €4 billion.
“In the round I do think it should be on a smaller scale to last year,” McGrath said, adding that he wants to provide support to those who need it most without pushing inflation in the wrong direction.
“It is a delicate balance that we have to strike but it is one that we are determined to get right,” he said.
Earlier today, the Central Bank published its quarterly bulletin in which it said it expects that the current inflation rate will see a “gradual and uneven” decline over the next two years.
Responding to the bulletin, McGrath said: “we are undoubtedly seeing a weakening of the external environment and as a small open-economy country that of course is weighing on Ireland.
He added that we are now seeing interest rate rises having their desired impact of dampening demand, which will in turn help reduce inflation.
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Taxation is theft.
@Andrew English: it’s necessary to pay your dole
@Peter Barnwallace: it’s just a pity you’re in the lower bracket. I’d get even more money off you. Up your skillset young Barnicles. You’re slacking.
@Andrew English: Taxation at the current levels to provide the current services is theft. USC is not needed! It generates around 5 billion a year. They received 8 billion more income taxes last year than they did in 2019. Biggest VAT and Corporate tax take ever as well!
@another one? what’s going on is the semi state sec: current level of corporation tax take isn’t guaranteed every year, therefore should be used for once off measures as well as setting up a sovereign wealth fund.
@Andrew English: corporate profiteering is theft.
@Andrew English: From my first job I’ve been in the higher income bracket, do miss the PRSI ceiling though
@Peter Barnwallace: corporate tax aside…. income tax levels without USC last year exceed 2019s take with USC. Why are we still paying it?!?! Corporate tax 2019 was 12.3 billion. Corporate tax 2022 was 24.6 billion. The govt is literally creaming it in from every avenue. They have so much money they don’t know what to do with it….. so why not do what the promised and get rid of USC. Lash the corp tax in a sovereign wealth fund. The problem is as the tax take increases, the departmental budgets increase, when they do the budgets won’t come down and that spending becomes the norm. When something goes wrong again our taxes increase again while their budgets remain high.
@Andrew English: English in name. English in nature.
@Peter Barnwallace: Liar.
@Peter Barnwallace: A FF minister in charge of our budget for the first time since they ruined the economy and caused the bank bailout which added 60 billion to our national debt and also led to our current housing crisis, God help us.
@Frank Cauldhame: absolutely delighted he is, and don’t remember FF being in Govt in UK, Greece, Germany, Portugal, Spain etc. All of those who suffered the effects of the international financial crisis.
@Peter Barnwallace: So just like Fianna Fail ‘leader’ Micky Martin you deny the bailout even happened? Do you also deny the Housing Crisis, homelessness, health service in tatters, young people who are highly qualified leaving Ireland because FFG turned the country into a kip. Remember when Bertie Ahern was warned by economists in 2008 that the bubble was about to burst and he told them to commit suicide? The bubble burst Stephen and Fianna Fail have control over our finances again? How did we allow this to happen?
‘He said this is because the environment is different and inflation is falling.’
These people are on another planet, so no payments for energy this budget, and the environment hasn’t changed, in fact it is worse for people, energy companies not giving as good discounts as previously (so price hike even if a drop in unit rate which is minimal), ECB hiked the interest rates up, basic essentials in shops still haven’t rolled back, petrol back to cruising not far off 2€…
@Dave C: exactly ECB achieving sweet **** all only pushing people into arrears not everyone has mortgages so it’s an uneven way to try bring inflation down and explains why is very slow to do it
@Dave C: but but but covid, ukraine, climate change, aliens, evil ninja penguins and whatever other pointless excuse the defenders of these lot pull from their rears will come along and literally lube up and say thank you for all these increases etc, cos they are all infected with the worst virus of them all, the me fein/im alright jack variant of selfishness. They are okay so to hell with the rest is their motto
people on wages that can’t afford rent or get a mortgage, should not be taxed at all.
We pay tax on “every” product and service we purchase.
Looks like he has forgotten that there will most likely be a G.E. next year that needs to be bought!
When are Inheritance Tax Bands going to be adjusted to pre emergency levels as promised by your Government?
@Brendan shanahan: Rich people get enough tax breaks already. A house worth €1mn divided between 3 children gives rise to an inheritance tax bill of precisely zero. Meanwhile only children inheriting the family home can also avoid inheritance tax through the dwelling house exemption. Any increases to inheritance tax thresholds would only benefit those that are already wealthy and would not benefit ordinary working families in any way.
@Kevin Collins:
But there is one problem with that Kevin
Older people almost all vote.
It will be increased, by FG, FF or SF
@Kevin Collins: And Farmers are treated the same when it comes to Inheritance Tax?
Do you think that Deposit Interest Rates is a non issue also?
Promises made by Senior Politicians over the years re Inheritance Tax, is I suppose, a non issue and the truth does not matter?
They gave themselves a 15% pay rise on top of their 150k salary, excluding travel expenses and a free bar in the Dail. Why would they be bothered about us. And if you think SF are going to be our saviours, think again, SF are socialists, socialism is communism lite. Take from the employed and give to the, ect ect, ect.
@Tim Higgins:
Source for the claim of a 15% increase to a TDs pay.???
@Tim Higgins: give to the what ?… come on spit it out
@P.J. Nolan:
Hmm, another one that makes easily verifiable false statements and runs away.
@P.J. Nolan: https://www.irishmirror.ie/news/irish-news/politics/top-public-servants-earning-over-27298013
@P.J. Nolan: P.J. Nolan, AKA as Leo. Wake up Leo and smell the coffee, or dose someone have to pore it up your nose before you smell it. So many blue shirts on here.
Every year, Leo the leak always floats these great ideas to give out money that he knows the Finance Minister has to rule out..
Course he does, don’t they always. Hope they are crucified in the GE. First time I will be voting for a change for sure.
Still not getting my vote
FFG .. the government who work against the people at every turn
It will never happen, Leo knows SF will be in charge of economic policy after the next election.
Nice Suit Minister. Would take me 2 years to save up for one.
God forbid they would just increase the 40 percent band properly and make it simple and quick. No, let’s just waffle about 30 percent and tell the plebs how complicated it is to implement right away and how many years it will take but we’re working on it so please vote for us.
Any chance you would remove the no tax on profits from banks, some doddery old toss-pot of former finance minister put in place to help his slevin banker mates. Only fair a mob who literally robbed the country, then had us pay it back on their behalf and who continue to run riot should at least pay something on the money to make…..sorry I forgot this is FFG, they would rather take money off those at the bottom first than any of their mates in the ivory towers
By God try running three houses
Who was dumen ough to vote them in?
Start with removing the temporary levies that were imposed years ago. Stop looking after your own interests.
You seem to have money to support everyone but us Irish Taxpayers who have stupidly believed that you cared.
@Brian Mc Mahon: tax changes effect everyone equally, they don’t apply based on your passport.
@Peter Barnwallace: The usc only effects those who work and are in the system.
One ff minister saying they can’t do 30% tax band this budget another minister telling us eu ain’t for changing on nitrate derogation all because of Leo’s falsehoods..il give him some credit he makes ff look like amateurs
Better to increase tax allowances and to increase threshold 40% kicks in at.
Scrap USC instead. Useless bunch
Punish workers so lazy slobs get their choice of free forever houses!
Wow, I wasn’t expecting this!
Leo in previous years promising to remove it, now McG stating the obvious.
If the government cannot look after us now, with record tax returns, they never will.
have your say