Alan Kelly (Tipperary, Labour)
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164. To ask the Minister for Finance if his attention has been drawn to the comments by An Taoiseach at a meeting of an organisation (details supplied) regarding changes to the tax regime for high earners; the proposals his Department has on foot of this policy objective; and if he will make a statement on the matter. [4307/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government's approach to income tax policy, and my approach to the issue as Minister for Finance, is informed by a number of principles including fairness, competitiveness and the need to improve the reward for work. 

The Deputy will be aware of the commitment in the programme for Government to a medium-term income tax reform plan that keeps the tax base broad, reduces excessive tax rates for middle income earners, and limits the benefit for high earners. At the same time, as a small open economy, we need  to remain competitive in attracting and retaining highly skilled individuals to work in Ireland.  High marginal rates of taxation are one aspect that we need to keep in mind in balancing competitiveness against other desirable objectives of the tax system. 

I am on record as stating that it is right that in Ireland we have a tax system where those on lower incomes pay less and those who earn more, pay more and that this position must be sustained. However, I have also stated that an income tax system that starts taking nearly half of every euro earned by the time someone is earning an average wage is not fair, is not economically efficient and is not sustainable. This is a cap on aspiration and places a ceiling on the ambitions of our people. And while the economy is now doing well, we cannot rest on our laurels, thinking that we do not compete for investment and jobs in a global marketplace.

As resources become available, it is my intention to continue the process of reducing the overall taxation burden on work in a way that is affordable and sustainable. 

As part of this process, an objective will be to reduce the marginal rate of tax, to reward work and to make Ireland more attractive both for indigenous workers, returning emigrants and others.

Therefore in Budget 2018, for the fourth year in succession, the Government continued to make steady, sustainable progress in reducing the income tax burden. The top marginal tax rate for income up to €70,044 has now been reduced to 48.75%.   It should be remembered that, as recently as December 2014, the marginal rate of tax for a single individual on all income over €32,800 was 52%.

The impact that the income tax burden has on the creation of employment has also been recognised, and I have introduced targeted measures to support Irish SMEs in this regard.  For example, as mentioned by An Taoiseach at the event to which the Deputy refers, a new Key Employee Engagement Programme (KEEP) was introduced in Budget 2018 with the aim of assisting SMEs competing with larger, more established businesses to recruit and retain the key staff needed to support business growth.