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

As I indicated in my earlier reply to Deputy Pearse Doherty, the income tax burden is too high and needs to be reduced. However, I have also stated that, although it is my intention to alleviate the burden, I can only do so when the public finances allow it. The general government debt at the end of 2013 is estimated to be just over €200 billion and each year we incur an annual deficit that figure grows.

The Government remains committed to returning the public finances to sustainability, upon which the prosperity of the economy depends. Under the terms of the Stability and Growth Pact, until Ireland has reached its objective of a balanced budget in structural terms, we may not introduce discretionary revenue reductions unless they are matched by other revenue increases or expenditure reductions. This means that the Government must consider carefully any tax change, as any reduction will need to be offset elsewhere. However, it should be noted that extending the standard rate income tax band would benefit all of those whose income exceeds €32,800. The extent of the benefit would depend on the amount by which the band was extended and the incomes of the relevant individuals.

Ireland has a progressive taxation system that ensures that the burden of taxation falls most heavily on those with a higher ability to pay. The latest OECD data indicates that Ireland has the most progressive tax system of the 21 EU countries that are members of that organisation.

As is the normal practice for the Minister for Finance, I have no intention of setting out planned changes to the tax system in advance of the budget, which is almost eight months away. My officials constantly model and examine potential options for changes to the tax system. Such options will be proposed for my consideration as part of the overall budget package for 2015.

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