Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 7:

In page 20, between lines 28 and 29, to insert the following:

“Report on tapering out of income tax credits

16.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.”.

If we look at tax revenue in the State, even before the pandemic, we had the situation of an aging population; a potential over-reliance on corporation tax, which has been flagged; and an inevitable decline in motor tax receipts, and petrol and diesel taxes as we transition to more environmentally friendly types of transport. As we emerge from the pandemic, it is clearer than ever before that we need to be more agile. We need to be a more responsive State. A stronger social safety net must be provided for those who need it. We need a health service that works and a public childcare option for parents that is genuinely affordable. This cannot be done unless we are willing to make the necessary investments and look at the sources of revenue for that necessary expenditure.

We know the Commission on Taxation and Welfare will examine these options, as the Economic and Social Research Institute has done. However, if we look at the programme for Government, we can see that basically all tax-raising measures are excluded unless they are behavioural-type measures suggested by the Government and we know the purpose of those measures is not to raise taxes, but to change behaviour. Therefore, the additional resources will not be generated. This amendment seeks to introduce a levy of 3% on incomes above €140,000. It would be an additional 3% on the portion of an individual income above €140,000. The amendment also seeks to taper the tax credits on incomes above €100,000. On incomes between €100,000 and €140,000, tax credit would be tapered out. I am mindful that the Labour Party across the water introduced a measure like this many years ago in Britain that it is still being maintained, even by the Conservative Party. Tax credits play an important role in our taxation system. They are intended to support those on low, middle and modest incomes. When people reach €100,000 in individual income, it is fair that they do not lose all their tax credits overnight at that threshold, but that they start to lose them as they earn above that amount.

These two measures combined would bring in more than €400 million. That is money that could be invested in the areas I outlined in terms of a stronger social safety net, better childcare and reduced fees for children's services, or indeed in making our health system fit for purpose. I commend amendments Nos. 7 and 8.

See this speech in context