Terence Flanagan (Dublin North East, Independent)
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311. To ask the Minister for Finance the measures in budget 2015 that will help the so-called squeezed middle; his plans for future budgets in helping the squeezed middle; and if he will make a statement on the matter. [41507/14]

Michael Noonan (Limerick City, Fine Gael)
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A fair, efficient and competitive income tax system is essential for economic growth and job creation. I have long said that the burden of the income tax system in Ireland is too high and that I would seek to reduce it as soon as it was prudent to do so. The measures announced in the Budget are the first stage of a reform plan, to be undertaken over a number of years, to address this issue, particularly for middle-income earners who have borne the greater share of the cost of the economic downturn.

In Budget 2015 I have reduced the top rate of income tax from 41% to 40%.  I have also extended the standard rate band on which income tax is chargeable at the lower 20% rate by €1,000. These measures ensure that all those currently earning in excess of €32,800 per annum will benefit from the tax changes in the Budget.

In addition I have reduced the two lower rates at which USC is payable from 2% and 4% to 1.5% and 3.5%, respectively. Furthermore, I have also increased the threshold before which the 7% rate of USC becomes payable to €17,576, so that those on the minimum wage will now only be liable to a maximum 3.5% rate of USC.

The Budget also provides for the retention of the exemption from the top rates of USC for medical card holders with incomes that do not exceed €60,000. These individuals will now only be liable to pay a USC rate of 3.5%, down from 4%. This reduced rate will also apply to the over 70s, with incomes that do not exceed €60,000, again down from 4%.

Ireland already has one of the most progressive income tax systems in the developed world. To preserve that progressivity, the Budget also contains USC measures which have the effect of limiting the maximum benefit from this package of tax measures to approximately €14 per week for any individual taxpayer, which means that those with very high incomes will only benefit to the same extent, as those with more modest incomes.

The changes announced in the Budget will ensure that all those currently paying income tax and/or USC will see a reduction in their tax bill in 2015. I propose to continue this reform in future Budgets, subject to the required economic growth and the consequent fiscal space available to the Government.