Ms Michelle Murphy:

Yes, it incentivises employment over welfare because it would widen the gap between pay and welfare rates. It also makes our tax and welfare system more appropriate to the 21st century. It benefits people on low incomes and makes our tax system fairer and more equitable. It also takes into consideration that many precarious forms of employment are on very low pay and people often do not have a choice whether to take these jobs, so at least everybody is treated fairly by the tax system under this proposal.

If this proposal were implemented, any further tax changes to be implemented in terms of income tax could be done through the tax credit system so that everybody would benefit in the same way, as opposed to changing bands and rates in which everybody does not benefit in the same way. The current discussion about changing the higher rate, for example, would result in the gain going to the highest earners. It does not go to those on low incomes. Even changing the standard rate band would only benefit those people who are at that rate and above it, that is, earning over €32,800 per year. There is no benefit to people earning less than that, and there is a huge cohort of people in the country who earn less than that. Implementing refundable tax credits would benefit those on very low incomes and it would also reform the tax system so that any future changes in income tax could be done through the tax credit system.