Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank Deputy Devlin for his good wishes. The position is that the programme for Government, Our Shared Future, contains a number of specific commitments relating to income tax. These include the commitment that from budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates. In addition, the programme states that the earned income tax credit will be equalised with the employee tax credit. It also includes a commitment to increase the home carer tax credit to support stay-at-home parents and those with caring responsibilities.

Significant progress has been made in achieving these commitments. For example, over the last two budgets the Government increased the standard rate cut-off point for single persons by 13.3% from €35,300 to €40,000, with commensurate increases for persons who are married or in civil partnerships. In addition, the main tax credits, namely the personal tax credit, employee tax credit and earned income credit, were increased by around 7.6% or €125 each from €1,650 to €1,775. It is also worth pointing out that the earned income tax credit was equalised with the employee tax credit in 2021. The home carer tax credit was also increased by €100 from €1,600 to €1,700, a 6.3 % increase, in budget 2023.

My Department has begun initial work on developing a medium-term roadmap for personal tax reform, taking account of the recent report of the Commission on Taxation and Welfare, and considering a range of measures across income tax, USC and PRSI, together with other related personal taxation issues. This exercise was signalled in the budget last autumn. I expect that when completed, the work will help inform deliberations relating to a number of aspects of the income tax system in the context of future budgets.

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