Budget 2024: Renewed calls for tax reductions for the ‘squeezed middle’

Fine Gael TDs and Senators have again renewed their call that those who were paying the top 40 per cent rate of income tax should benefit from tax reductions in the forthcoming Budget .

At its party meeting on Wednesday, a number of parliamentarians called for what they called the “squeezed middle” to be protected and have money put back in their pockets. One TD at the meeting referred to Revenue figures that show that more than 1 million workers are now in the top income bracket, where the tax rate is 40 per cent.

Taoiseach Leo Varadkar has himself called for such breaks but told colleagues that while €1.1 billion would be set aside in the Budget tax package, it would not be possible to do everything Fine Gael would like to do.

He told the meeting that the Budget would be “tight” as a lot of the extra resources available to the Government to spend would be eaten up by higher costs and inflation.

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Echoing the sentiments of Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe, he said that room for new initiatives would be more limited than last year, when the Budget included €4 billion in once-off spending.

Referring to the disclosures over spinal surgeries in Temple Street Hospital, Mr Varadkar cautioned colleagues not to jump to conclusions or look for scapegoats before all the facts surrounding the case had been established.

When the subject of this weeks’ protest by child care workers came up, he responded to colleagues’ concerns  by saying the Government wanted to make it more affordable, make more places available, and increase both the service and the conditions for workers.

Childcare was also a theme at the Fianna Fáil meeting, where Senator Lisa Chambers briefed on the meeting she and party colleagues had held with Minister for Children Roderic O’Gorman on Tuesday.

She told the meeting there was a real problem with smaller providers in the sector getting “squeezed”.

The ongoing concerns with school transport places for children in rural areas was also raised at the meeting by several TDs. Minister for Education Norma Foley gave a short reply outlining her Department’s response to date. Further discussions on the matter were not possible because of voting requirements. A review on the situation is due over the next few weeks.

Meanwhile, Fianna Fáil’s Dáil spokesman on Social Protection has said that the government must use the budget to protect social welfare recipients from their payments being eroded through inflation.

As pre-budget lobbying intensifies, Dublin North West TD Paul McAuliffe told reporters on Wednesday evening that once off welfare payments in last year’s budget “just about kept people afloat”.

“Whether it’s by once-off payments or adjustments to the core rate, we have to protect payments by keeping up with inflation,” he said.

He was speaking after a round-table with key organisations operating in the social protection sector, held in advance of the budget and attended by a range of Fianna Fáil Senators and TDs, including Minister of State at the Department of Enterprise Dara Calleary – with Cabinet ministers now set to be briefed on the meeting.

Mr McAuliffe said there was a “lot of common voices” between Fianna Fáil deputies and Senators and the groups they met on Wednesday afternoon – almost all of whom are seeking increases in core welfare payments of around €25 per week – well in excess of what is expected.

He said while he had no preference over a split between once off payments and permanent increases, the organisations all wanted permanent increases.

“That’s what we heard in the room today and I think there was many Fianna Fáil backbenchers that want to make sure that people who are reliant on social protection… that their living standards as a result of inflation.”

He said the challenge for the government would be to raise the core rates but also use once-off payments to bring “balance” and “keep people on par because otherwise it will be a reduction in the standard for people”.

Mr Calleary said the mix of once-off payments and increases to core payments would avoid compounding inflation further.

The party’s spokespersons on social protection in the Dáil and Seanad, Paul McAuliffe and Catherine Ardagh, led the meetings.

Ms Ardagh called for a properly funded, non-means tested cost of disability payment that would cover extra and hidden costs – and iron out problems like people losing access to their payment after being married or receiving an inheritance.

She also said the means testing for carers was “very prohibitive” and that a scheme for non means tested payments for carers should also be examined.

Minister for Finance Michael McGrath and Minister for Social Protection Heather Humphreys will be briefed on the meeting, Mr Calleary said, adding that they planned to be “reinforcing his awareness” ahead of the budget.