Peter Burke (Longford-Westmeath, Fine Gael) | Oireachtas source

I thank the Senator for raising this very important matter. He quoted from the programme for Government, Our Shared Future, with regard to the specific commitments in this area. It states:

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.

The Senator quite rightly pointed that out. Significant progress has been made in achieving this commitment over the past few budgets. Budget 2022 included an income tax package with a cost of more than €500 million. The single standard rate cut-off income tax band was increased by €1,500 from €35,300 to €36,800, a 4.3% increase, with commensurate increases for persons who are married or in civil partnerships. In addition, the primary tax credits - personal, employee and earned income tax credits - were also increased by €50 from €1,650 to €1,700, which is just over a 3% increase.

Budget 2023 also included a substantial personal income tax package amounting to €1.13 billion. Again, the single standard rate income tax band was increased, on this occasion by €3,200 from €36,800 to €40,000, an 8.7% increase, with commensurate increases for persons who are married or in civil partnerships. In addition, the primary tax credits - personal, employee and earned income tax credits - were also increased by €75 from €1,700 to €1,775, which is just over 4.4% of an increase. These tax changes effectively indexed the income tax standard rate bands and main personal tax credits within the fiscal resources available. Furthermore, in budget 2023, the home carer tax credit was also increased by €100 from €1,600 to €1,700 a 6.3% increase.

On USC, in both budget 2022 and budget 2023, the ceiling for the 2% rate of USC was increased in line with increases in the national minimum wage, which is €11.50 per hour in 2023, to ensure that a full-time adult worker on the national minimum wage would remain outside the top rates of USC. The temporary USC concession for full medical card holders earning less than €60,000 was also extended in both budgets such that it remains in place until end December 2023.

Last week, it was announced in the summer economic statement that a tax package of €1.1 billion is being provided for in budget 2024, with measures that shield workers from higher taxation arising due to inflation being prioritised. With this in mind, the Minister for Finance will be developing a package, including policies relating to taxation, over the coming months.