Income levy of 3% to be included in Finance Bill

 

THE GOVERNMENT is expected to introduce a further series of measures in the next two weeks to deal with the economic crisis, including a 3 per cent levy on incomes over €250,000.

A special committee to review public expenditure, particularly civil service staffing levels, is also planned.

The Finance Bill, which goes before the Cabinet tomorrow and is presented to the Dáil on Thursday, includes a number of adjustments to proposals made in the Budget on October 14th.

Subject to Cabinet approval, these will include a levy of 3 per cent on gross income over €250,000 a year. The Government had already decided, after consultations with the trade unions, to exempt those earning less than the minimum wage of €17,542 from the income levy introduced in the Budget.

The 3 per cent imposition on the higher-income group is expected to generate €60 million in revenue, which the Government says is equivalent to the amount that would have been collected if the levy on the lower-income group had been maintained.

On that basis, the Government insists it has not made a U-turn and sources said this type of adjustment was normal between the Budget and the Finance Bill.

At present there is a levy of 1 per cent on income up to €100,000, increasing to 2 per cent above that. The levy across the different pay levels is expected to bring in over €800 million.

Other proposals in the Finance Bill include an increase in Capital Acquisitions Tax, covering inheritance and gifts, which is expected to go up to 22 per cent.

The Government is also fine-tuning its proposal for a €10 tax on airline passengers. Whereas Dublin airport was initially expected to pay less than airports outside the capital, it is now understood the Finance Bill will ensure there is equity.

The Government-appointed taskforce on public sector reform is to issue its report on November 26th. At the same time, a review group will be established to scrutinise public service expenditure.

Taskforce recommendations will include: a review of staffing right across the public service in order to ascertain which posts are surplus to requirements; measures to facilitate greater redeployment of staff; and fresh efforts to generate savings by sharing services such as salary payments and human resources between sectors.

The taskforce report will set the scene for the expenditure review group to carry out its work. This is expected to lead to voluntary redundancies.

The Cabinet is also expected to consider proposals in the next week or two from Minister for Transport Noel Dempsey for an increase of up to 10 per cent in public transport fares. The Government has ruled out a 20 per cent increase.

Meanwhile, Labour's finance spokeswoman Joan Burton pointed out that the Government gave 20 times more in tax relief in 2006 to property-based schemes, at €464.4 million, than to schemes for the promotion of small and medium-sized enterprises, at €22.6 million. "We need to shift the balance of advantage within the tax code . . . towards high-risk, high-tech investment," she said.