Written answers

Thursday, 3 April 2014

Photo of Brendan GriffinBrendan Griffin (Kerry South, Fine Gael)
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63. To ask the Minister for Finance the way he believes income tax and-or USC cuts could best be applied to achieve increased economic activity and greater social fairness; and if he will make a statement on the matter. [15799/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that I have put on record my belief that the income tax burden is currently too high in Ireland and that I believe it needs to be reduced. However, I have also said that although it is my intention to alleviate the burden I can only do so when the public finances allow it. It should be acknowledged that Ireland has a progressive taxation system which ensures that the burden of taxation falls most heavily on those with a higher ability to pay. The low effective tax rates for low income workers ensures that work pays and is a growth friendly aspect of Ireland's tax system.   The latest data from the OECD's 2013 Taxing Wages report shows that Ireland has one of the most progressive income tax systems in the developed world. It is in this context that the Government has committed in the Programme for Government not to increase the marginal rate of income tax.

The Programme for Government also contains a commitment not to change tax credits, which at current levels ensure that an estimated 856,000 workers are excluded from the charge to income tax entirely. Furthermore, delivering on a commitment in the Programme for Government, the USC was reviewed by the Department of Finance in the lead up to Budget 2012.  As a result of the review of the USC, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge. It is a little early to consider, let alone set out, changes to the tax system in advance of the Budget, which is still over six months away. As is normal, my officials will model and examine potential options for changes to the tax system for my consideration as part of the overall Budget package.

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