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

The report I referred to, the personal tax review, was published on budget day in October. It has a whole chapter on the option of a third rate of income tax and goes into quite some detail on the issues that arise, the policy considerations, the costings and so on. To summarise, among the issues that would need to be considered is that of cost. If there were to be a third rate of income tax, the width of the band would need to be at least €5,000, or probably considerably more. The cost of implementing that would have to be considered, as would the impact on pension tax relief – for example, in respect of those currently getting pension tax relief at the 40% rate. If their marginal rate became a lower rate, they would incur a reduction in the tax relief on their pension contributions. That would need to be considered as well, in addition to the distributional impact of the introduction of a third rate. Therefore, I suggest that some consideration be given to what was published on budget day. It involves significant work as part of the personal tax review and examines the issue of a third rate of income tax.