Terence Flanagan (Dublin North East, Fine Gael)
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To ask the Minister for Finance his plans to introduce a higher tax rate for the higher paid earners; and if he will make a statement on the matter. [45480/12]

Michael Noonan (Limerick City, Fine Gael)
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The position, as stated in the Programme for Government, is that as part of the Government’s fiscal strategy, we will maintain the current rates of income tax along with bands and credits. In addition, we will not increase the top marginal rates of taxes on income. There are no plans at this time to depart from this policy. I should point out that the top marginal rate of taxation on income is now 52% for PAYE workers and 55% for the self-employed. The latest OECD data indicates that Ireland has the most progressive tax system of the EU members of its organisation. A progressive taxation system ensures the burden of taxation falls most heavily on those with a higher ability to pay. It is estimated that in 2012, the top 5% of income earners will pay 43% of the total income tax, while it is estimated that those earning €50,000 or less, representing 78% of income earners, will pay 20% of the total income tax. Furthermore, it is estimated that in 2012, 841,100 individuals, representing 39% of the income tax base, will be exempt from income tax. When marginal rates of tax are very high, jobs are lost. Indirect taxes have a less adverse impact on employment. That is why indirect taxes rather than taxes on income were increased in the last budget. However, that does not mean the wealthy should not carry the principal burden of tax. The minimum effective tax restriction on high earners is designed to ensure this by imposing a minimum effective income tax rate of 30% for those subject to the full restriction, in addition to 4% in PRSI and up to 10% in the USC.