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

Even with the changes we have made in this budget, people in Ireland enter the marginal rate of income tax of 48% when they earn €42,000. In international terms, that is a relatively low level of income at which people hit a marginal rate of tax of 48%. That is the reality and what Deputy Shortall is proposing, in effect, is to make the system even more progressive. I can tell her, as somebody who engages extensively with employers, with people who currently invest in Ireland and who are looking to invest in Ireland, that our income tax system is a factor. It is not the only consideration but it is definitely a consideration in the decisions they make.

In response to Deputy Moynihan, I will give the example of somebody on a middle-income figure of €45,000, for whom the gain in the budget is €767. That is the combined gain from the changes in income tax and USC. What that means is that his or her effective tax rate before the budget was 21.2% and after the budget it is reduced to 19.5%.

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