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

I will just address the tapering suggestion, which is the main difference between what I have done and what the Deputy proposes. The Deputy’s proposed amendment would involve the tapering out of the new earned income credit for individuals earning in excess of €80,000, with the credit to be completely extinguished when income reaches €100,000. The purpose of this credit is to narrow the gap in the tax treatment of the self-employed and employees. That being the case, to taper out the credit at higher incomes when no such taper is imposed on the PAYE credit would be to introduce a new disparity between the two cohorts. In this context, the Deputy will be aware that until such time as both the Revenue Commissioners and employers move to a real-time PAYE system and away from the current system of annual returns, the tapering of tax credits for employees would not be operationally possible. The Deputy is also aware that the self-employed become liable to an additional 3% USC surcharge on incomes of over €100,000. To impose a further liability to tax through the extinguishing of the earned income credit at the same income level could therefore be perceived as imposing a further burden on incomes at that level. I therefore do not accept the Deputy’s proposal.