Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The issue I have is regarding the distribution of the benefit of the Minister's tax package. He has put forward a definition in terms of people in the middle income bracket. The reality is that an individual earning €32,000 a year - who falls just below the threshold at which one enters the higher rate - would only benefit from the USC changes. That individual would benefit to the tune of €174 per annum. If one earns just inside the thresholds at which one enters the higher rate, one would benefit from the increase in the threshold and from the reduction in the rate cut. One would get three tax cuts as such. I, as a Deputy, would benefit to the tune of approximately €750, whereas an individual earning €32,000 a year would benefit only from the USC changes of €174 per annum. Similarly, in the case of a married couple where there is only one income earner on €41,000 a year, they would only benefit to the tune of €174 per annum. The Minister has not calibrated it fairly because there is a dramatic step-up for those who earn beyond the entry point to the higher rate of tax. It is not fair that somebody earning €70,000 would benefit four times more than somebody earning €30,000, but that is what the Minister has done. Somebody earning €70,000 or more would benefit by €750 per annum compared to somebody earning €32,000 a year who would only benefit by €174 per annum. If one is earning €32,000 a year, one's income will be above all of the eligibility thresholds for State support. One would not qualify for a medical card, rent supplement or family income supplement in all likelihood, and one would not qualify for any means tested payment. Many people working full-time earn that amount and less. People on the minimum wage are on €18,000 a year. It is most acute for those who are just below that entry point. If the Minister had redesigned the USC in a more fundamental way, he could have graduated the benefit far more evenly than he has done, but what he has done has resulted in a crude impact depending on whether one is earning above or below the entry point to the higher rate of tax.