Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
Link to this: Individually | In context

Question 55: To ask the Minister for Finance his views on whether low income families should be subject to direct taxation; his views on whether there is scope to introduce a third level of direct tax on high income earners; and if he will make a statement on the matter. [34066/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

In my Budget 2010 speech last year, I stated that the income tax system had become imbalanced. It is estimated that in 2010, approximately 45% of income earners will be exempt from tax and 42% of income earners will pay tax at the standard rate. I consider that this shift in the income tax burden is unsustainable and the income tax base needs to be widened.

As I also stated in Budget 2010, with a view to restoring balance in the income tax system, to simplify it, to make it fairer and more broadly based, I intended introducing a new universal social charge that would be paid by everyone at a low rate on a wide base.

With regard to the introduction of a third rate of tax for those with high incomes, the position is that the Irish taxation system already has provisions that apply to such individuals with high incomes viz. the 5% health levy rate on income over €75,036 per annum and the 6% income levy rate on income over €174,980 per annum. In fact, in 2008 the top marginal rates for PAYE employees and the self-employed were 43.5% and 46.5% respectively. Today the top marginal rates are 52% and 55%.

As you will appreciate, it is a long standing practice of the Minister for Finance not to comment in advance of the Budget on any tax or expenditure matters that might be the subject of Budget decisions.