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Budget income tax and USC options laid out for government in new report

The Taoiseach has indicated that increasing income bands is likely.

INCOME TAX OPTIONS have been presented to government ahead of October’s budget which indicates that continuing with increasing the standard rate of the income tax cut-off point, the threshold at which earners starting paying the top rate of tax, from €42,000 to €43,890 would cost €465 million.

Coalition leaders have said that the government’s main focus will be on income tax, and have indicated that the standard rate band will continue to rise in this year’s budget.

The Summer Economic Statement outlined that €1.4 billion is available for tax measures. 

According to a paper from the Department of Finance’s Tax Strategy Group (TSG), which outlines the possible cost of potential income tax changes ahead for Budget 2025. 

Apart of changes to the standard rate, reducing the top rate of income tax from 40% to 39% would cost the exchequer €525 million a year, it finds. 

“We’ve consistently made progress on increasing those income bands. I’d hope we could do that again,” Taoiseach Simon Harris said recently. 

The Taoiseach has also indicated that further Universal Social Charge reductions (USC) are on the cards.

Tánaiste Micheál Martin, along with the Taoiseach, have also indicated that the budget will target low to middle income earners, stating that it is about ensuring that workers can maximise their take-home pay. 

The tax papers note those earning less than €69,000, which represents the bottom 80% of income earners, contribute 21% of total income tax and USC receipts.

Those earning over €102,000 per annum contribute 63% of all the income tax and USC collected in 2024.

Fianna Fáil and Fine Gael ministers are in favour of cutting USC by 0.5%, which would be the same cut that was in last year’s budget.

The tax paper sets out that this year, 37% of all taxpayers will be exempt from USC, while 19% of all taxpayers will pay a maximum rate of USC of 2%, as they are earning up to €25,760 or those over 70 with income of less than €60,000 per annum. 

However, a total of 33% of all taxpayers will pay a maximum rate of USC of 4%, which is
taxpayers earning up to €70,044, while 11% of taxpayers will pay the top rates of USC, as they are earning over €70,044.

In addition, the paper sets out that Ireland’s tax base is “highly dependent” on the taxation revenues from a small number of multinational companies.

The latest data shows that over half of corporate tax receipts were paid by just ten large taxpayers in 2023.

This means that €1 in every €7 of all tax collected by the State is directly sourced from these large corporate tax payers, which poses a major concentration risk.

With receipts totalling €23.8 billion in 2023, Corporation Tax is now the country’s second largest source of tax revenue accounting for approximately 27% of receipts.

“A shock to one or more of the small number of high-income sectors could also represent a significant vulnerability for the public finances and one whose impact may not be gradual,” the tax paper stated. 

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    Mute James Groden
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    May 24th 2023, 8:30 AM

    “Roll up and see for yourselves how copy and paste works in journalism!”

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    Mute Andrew Lavelle
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    May 24th 2023, 9:07 AM

    @James Groden: watch as we delete all comments that don’t agree with our opinion and in some cases don’t allow comments at all!

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    Mute Zim Zimma
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    May 24th 2023, 9:11 AM

    Watch as we slightly reword Government press releases on various subjects where the public are told to get back in our boxes and do what we’re told and then turn the comment section off, because we don’t don’t want any dissenting voices.

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    Mute Antbony Kearns
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    May 24th 2023, 9:34 AM

    Watch as we shut down the comment section when too many comments go against the narrative.. Breaking News! “Ten People killed in overnight raids in Gaza” Yea shut down comments on that one, as we don’t want People giving out about Israel.. Journalists my ar_se

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    Mute Donal Desmond
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    May 24th 2023, 11:35 AM

    In the past few weeks statements made by government Minister’s, the comment section has been closed. The taking down of comments that contain no personal or unacceptable comment but would have been critical of government have been removed. Bit hypocritical of the Journal.

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    Mute Joe x
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    May 24th 2023, 1:25 PM

    @William slevin: respond to what? your mas ravings? No point. At this stage I pity you.

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    Mute William slevin
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    May 24th 2023, 1:52 PM

    @establishment loyalist fascist lil joey:

    I didn’t ignore it no offence I forgot about it…also its not a priority to reply to every reply you make to me which is alot…

    But I think it was about the 70 year old assaulted in clare? I don’t know the circumstances of the assault but I’m guessing your employing it was done by anti mass immigration protestors….do you have proof of this? But let’s say it’s true I have no idea….I abhor violence against anyone unless its done for defensive reasons….if this 70 year old man was attacked by one of the protestors….then I would condemned such an attack as that infringes on the right of the 70 year old not to be assaulted for no reason…

    So I would condemn such an attack

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    Mute Joe x
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    May 24th 2023, 1:44 PM

    @William slevin: why willie and leave your mad raving influence others wrongly. Like your support for the protest in Clare….you know the one….I asked for your view of what happemed there on Sunday…and you ignored my question…..

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    Mute William slevin
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    May 24th 2023, 2:03 PM

    Also you repeatedly ignore me asking you for proof of the false claim you keep making against me that I’ve incited hatred…well Where’s your proof…I want the comments and the articles where I supposedly incited hatred….

    You haven’t so far because you can’t…because your a liar….

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