Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 5:

In page 11, after line 34, to insert the following: “Report on tapering out of income tax credits

11. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on tapering out income tax credits for incomes between €100,000 and €140,000 at a rate of 2.5 per cent for each €1,000 earned.”.

The programme for Government has ruled out any income tax increases despite a sizeable deficit in the State's finances as a result of Covid-19, as well as the legacy of an expanded State. In an interview last week in The Irish Timeswith the Minister for Public Expenditure and Reform, he raised the prospects of new sources of revenue in spite of the larger State without spelling out what those new sources would be. Will the Minister square the circle for me?

The programme for Government rules out income tax increases while the Minister for Public Expenditure and Reform is examining new sources of revenue.

Amendments Nos. 5 and 6 are grouped and we are speaking to both of them at the same time. The amendments propose progressive taxation measures, one of which was implemented by a Labour Government in Britain under Gordon Brown and has continued under the Tories in an aim to fund expanded services. Amendment No. 5 proposes the tapering out of tax credits. We know the importance of tax credits in our taxation system to offset or reduce tax liability. The argument I am putting forward here, and have been putting forward for a number of years, is that when an individual reaches an income of €100,000, he or she should then start to see his or her tax credits reducing or tapering out. That is what happens in Britain, as I said, where for every £2 that is earned, approximately £1 is lost in tax credits. We are arguing that a rate of 2.5% would apply for every €1,000 earned above €100,000. Someone who earns €100,000 gets the full benefit of tax credits, 2.5% of the credits is lost at earnings of €101,000, and, at €140,000, he or she would have no benefit of tax credits because they would all have tapered out at that stage.

Amendment No. 6 is connected but separate from amendment No. 5. It proposes a solidarity levy or high income levy of 5% on incomes above €140,000. That is for the reason I earlier outlined, that is, that above €100,000 of individual income, one should start to see one's tax credits reducing and tapering out until they are all lost at an income of €140,000. At that point, a solidarity levy of 5% applies to the portion of income above €140,000. Those are the types of progressive policies that the Government should consider but perhaps the Minister for Finance has other ideas and can enlighten the committee as to the other sources of revenue mentioned by the Minister for Public Expenditure and Reform in his interview with TheIrish Times.