Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Our taxation system is among the most progressive in the OECD in that those on lower incomes pay less income tax as a share of their income than those on higher incomes. Budget 2023 included a significant personal income tax package, estimated to cost €1.13 billion. Overall, in all the measures contained in that tax package, it is expected 2.1 million taxpayers will benefit in different ways.

It is important to bear in mind, however, that tax measures form only one component of the budget. The Department’s analysis shows that the gain in the top five income deciles is mainly from direct and indirect tax measures, while welfare measures and the energy credit are responsible for most of the gains in disposable income for households in the bottom five deciles.

With the increase in the national minimum wage from €10.50 to €11.30 per hour from 1 January, those on the national minimum wage will be better off in overall net terms.

In addition, the ceiling of the band for the 2% rate of USC is increasing by €1,625 to €22,920. Similar to previous years, this policy measure is to ensure that a full-time worker on the minimum wage, who will benefit from the increase in the hourly minimum wage rate, will remain outside the top rates of USC. As the Deputy acknowledged, policy matters regarding adjustments to PRSI are dealt with in the social welfare legislation and are a matter for the Minister for Social Protection. However, I will pass this on to her.

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