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

I repeat the point that we have one of the most progressive systems of taxes and social transfers of any EU or OECD country. These systems contribute to the redistribution of income and the reduction of income inequality in Ireland. On indexation, it should be pointed out that the personal tax review included a detailed analysis of indexation of the personal tax system in chapter 6 of the report. The report set out the background information on indexation, the position in other jurisdictions and options for indexation, such as indexation in line with wage growth, headline inflation and core inflation. It is also worth pointing out that significant progress has been made to date in delivering on the programme for Government to index credits and bands. Budget 2024 was the third consecutive year with a substantial tax package that indexed tax credits and bands within the fiscal resources available. In cumulative terms, the main personal tax credits have been increased by €225 from €1,650 to €1,875, a 13.6% increase. The standard rate cut-off point has been increased by €6,700 from €35,300 to €42,000, a 19% increase for single persons, with commensurate increases for married couples and civil partners. The case has been made that we should identify a cut-off point beyond which there would be no benefit from any changes in the income tax system that we brought forward in the budget. That would serve to increase further the progressivity of our income tax system but that has to be weighed against the competitive factor that is Ireland's income tax system when it comes to deciding on investment decisions. I know at first-hand, from the discussions I have had on investment decisions, that it is a factor. To do as Deputy Shortall has proposed would result in us becoming less competitive and attractive when it comes to those investment decisions.

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