Net income should be considered in relation to tax, says Noonan

The difference between gross and net income should be taken into account when considering tax cuts, Minister for Finance Michael Noonan told the Dáil.

He said a person on PAYE with a gross income of €70,000 paid more than €25,000 in personal income tax. Accordingly, the net income was less than €45,000.

“We are directing it from that level down,’’ he added. “It is not from €70,000 down but €45,000 down.’’

Mr Noonan was replying to Sinn Féin finance spokesman Pearse Doherty, who asked about the Minister's plans to cut the top rate of tax in the next budget.

Mr Doherty said the Economic and Social Research Unit (ESRI) had stated cuts in the top rates of tax, or in the universal social charge, would have a strong impact on households with incomes in the top 10 per cent, but little effect on households at low and middle-income levels.

Mr Noonan said the ESRI’s publication was a welcome part of the information base leading up to the budget each year.

Essential

He had said, he added, on many occasions that a fair, efficient and competitive income-tax system was essential for economic growth and job creation.

"I have long said that the burden of the income-tax system in Ireland is too high and that I would seek to reduce it as soon as it was prudent to do so,'' Mr Noonan added.

“Ireland already has one of the more progressive income-tax systems in the developed world.’’

Mr Noonan said Sinn Féin was a high-tax party and “all of the bombast, rhetoric and personal attacks’’ would not get away from the fact that it was involved in fantasy economics.

Mr Doherty accused the Minister of coming into the House to “peddle his mistruths about Sinn Féin’s economic policies’’.