Taoiseach plans more tax cuts for middle earners

Taoiseach Enda Kenny has launched a determined bid to set the political agenda for the coming year with a promise to cut the top marginal tax rate on most incomes to less than 50 per cent if the Coalition wins the next election.

After a year of controversies that have damaged the Government’s standing, Mr Kenny delivered a major speech on the economy with a pledge of continued tax cuts if he is returned to office and a warning about the dangers of political instability.

His tax commitments were outlined at a special Thanksgiving lunch in Dublin hosted by the American Chamber of Commerce and later he warned of the dangers of political instability and the impact that might have on the growing pace of the economic recovery.

“Remember we had three elections in the 1981/1982 period. Stability is important to sustain confidence, economic growth and jobs in the years ahead,” he said at the launch of a book on political communication in Ireland.

The Taoiseach expressed the hope that the media would facilitate the voters in a debate about what was in the country’s long-term interest when decisions came to be made about the future in early 2016.

He repeated the pledge made earlier in the day that it was “time to start giving back to the hard-pressed sections of society” who had made the sacrifices necessary to see the country through the economic crisis.

Mr Kenny’s message is clearly aimed at the middle-income earners on salaries of between €33,000 and €70,000 at whom the tax changes in the last budget were directed.

The budget benefits have been overshadowed by the water charges controversy and the Government is now making a pitch to recover the initiative and try and shape the nature of the debate in the year ahead.

Fine Gael will be mounting a communications campaign in the coming weeks to alert people to the budget benefits, while Labour TDs will also attempt to alert people to the tax reductions and social benefits such as the €5 increase in child benefit and the partial restoration of the Christmas welfare bonus.

Internationally competitive

Mr Kenny told the American Chamber of Commerce lunch the relatively high rate of personal taxation in the Republic was something that had to be addressed if the State was to remain internationally competitive.

As a result of the measures in Budget 2015, the top marginal rate of tax, which includes PRSI and the universal social charge, will be cut from 52 to 51 per cent from next year on earnings up to €70,000.

The Taoiseach said the top tax rate would be dropped to a maximum of 50 per cent in next October’s budget for most people. “And we will reduce the rate of income tax further in subsequent budgets if the people decide to re-elect this Government.”

The Taoiseach said the tax-reducing measures in the budget were specifically targeted at low- and middle-income workers “who pay high taxes at very modest income levels”.

“We understand that the high rate of personal taxation in Ireland is something that has to be addressed, and is being addressed, if we are to remain internationally competitive for highly skilled mobile investors and jobs.”