Oireachtas Joint and Select Committees

Tuesday, 17 November 2015

Committee on Finance, Public Expenditure and Reform: Select Sub-Committee on Finance

Finance Bill 2015: Committee Stage

4:00 pm

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael) | Oireachtas source

Except in very general terms, there is not a crossover between the sympathetic way in which the Deputy outlined a particular case for an elderly person and the personal taxation measures in the budget.

To return to the Deputy's original point, if we believe in a society where people get paid for their smarts, longer hours worked and the responsibilities taken on, as the Deputy suggests, to keep a spark in an economy to keep things going - in essence, to incentivise people - surely the same applies when tax relief is applied. Otherwise, the rules are being changed. We made a major change in not following the Deputy's formula by capping the reliefs at €70,000 per income. If we followed the Deputy's "spark" argument, we would not have capped it at €70,000 but run it up to the highest incomes in the country. The Deputy cannot have it both ways and if that is the kind of society in which he believes, it is an inevitable consequence of that model, which I believe in as well, that people on higher incomes seeing relief through personal tax reductions will get more in euro than a person on a lower income but with the same percentage relief. To avoid extravagant gains, we have capped this at €70,000. As I noted, the single person on €70,000 pays a tad under €25,000 in personal taxes, so the take-home pay is just over €45,000 after personal taxes.

The Deputy raised another factor in suggesting we have the most unequal society in terms of income distribution across the developed world. That is untrue. Independent research has demonstrated that Ireland's system of taxation and social welfare transfers has the highest impact on improving direct income equality among all OECD countries.

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