Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

This section deals with tax credits and the income tax package of the budget.

There was a number of ways we could ensure that taxpayers benefited in the budget. The Minister chose to do a number of things but the largest component was the increase in the standard-rate band. The full-year cost of that is €739 million. Given that only 23% of income earners are expected to pay at the higher rate, why did the Minister decide to spend €0.75 billion on that measure that excludes a large number of income earners both on low pay and also on middle incomes? The Government has talked about middle income earners but I presume the Minister will acknowledge that the statistics are very clear on income distribution that the median annual earnings of an individual stood at €20,628. That is from the Commission on Taxation and Welfare. I know that the Government dissed the valuable work that those officials did. At least the Fine Gael leader did; in fairness I did not hear the Minister speak about them in that way. Those are the statistics on the median annual earnings, €20,628. The median gross household income is €51,000. The problem with this measure on the standard rate band is that an individual earning €35,000 does not benefit from this. Only 23% of income earners do. The ESRI made the point to the Committee on Budgetary Oversight that the standard-rate cut-off was increased by more than the forecast inflation yet other measures such as tax credits or USC were not. They were significantly less than the forecast inflation. The ESRI concluded that the permanent budgetary changes, specifically, the extension of the standard-rate cut-off band benefits high income households most which leads to steeper losses for lower-income households compared with higher-income households. That is the ESRI saying. Sorry, there is a misprint here: the median annual earnings are €30,628 not €20,628. Someone on €30,000 would not benefit from this." Why then did the Minister decide to introduce a €0.75 billion package that benefits higher income households most and leads to steeper losses for lower income households compared with higher income households when we look at indexation?