Terence Flanagan (Dublin North East, Fine Gael)
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To ask the Minister for Finance his views on a matter (details supplied) regarding income tax; and if he will make a statement on the matter. [45940/12]

Michael Noonan (Limerick City, Fine Gael)
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The position is as stated in the Programme for Government that as part of the Government’s fiscal strategy we will maintain the current rates of income tax together 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 per cent for PAYE workers and 55 per cent 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 that the burden of taxation falls most heavily on those with a higher ability to pay.

In addition, it is estimated that in 2012, the top 5 per cent of income earners will pay 43 per cent of the total income tax, while it is estimated that those earning €50,000 or less, which represents 78 per cent of income earners, will pay 20 per cent of the total income tax. Furthermore, it is estimated that in 2012, 841,100 individuals, who represents 39 per cent 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 in the last Budget, indirect taxes rather that taxes on income were increased.

However, that does not mean that 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 per cent for those subject to the full restriction, in addition to 4 per cent in PRSI and up to 10 per cent in the USC.