Varadkar’s proposed tax cuts will take money out of public services when they are needed most

06 September 2018

Responding to the Taoiseach’s letter to Micheál Martin and the front page headline ‘Tax cut of €600 for “average worker” key to Varadkar’s wish-list’ (Irish Independent, 5 September 2018), Labour Leader Brendan Howlin pointed out that far from providing a tax cut for “average” workers, the proposed changes would not provide any benefit to the large majority of working people.

Deputy Howlin said:

“Despite Fine Gael’s attempts to portray itself as a centrist party, its budget decisions consistently reveal its right-wing tendencies.

“The income tax reductions being proposed by Leo Varadkar aim to change the threshold at which people begin to pay the higher rate of tax.

“But, for example, only the top 19% of income earners actually pay any tax at the higher rate of 40% according to Revenue statistics. So this tax break will only benefit those who are already earning the most.

“Ireland already has the lowest effective rate of personal taxation on average workers, including USC and social insurance, compared to all other EU members of the OECD. Workers on average full-time wages in Ireland pay an effective rate of 27.2% in personal taxes, compared to 30.9% in the USA, 31.7% in the UK, 36.3% in Denmark or 42.9% in Sweden, according to OECD statistics.

“In order to benefit from any part of this proposed tax cut, a single person would have to already be earning over €34,550 and a lone parent would have to earn over €38,550. Married couples would need a combined income of at least €43,550 to receive any benefit.

“Leo Varadkar’s proposed tax cuts would not benefit the vast majority of workers, especially those working part-time or on limited hours. Most workers in retail, security, hospitality and other lower wage sectors will see no benefit.

“These proposals will not put one cent into the pockets of the vast majority of Ireland’s workers, but they will take money out of our public services and house-building at a time when we need to invest as much as we can into providing affordable housing for all.

“Labour will be opposing any tax cuts in Budget 2019 in favour of investing in housing and healthcare.”

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