Michael McGrath (Cork South Central, Fianna Fail)
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The Programme for Government (PfG), “Our Shared Future” contains a number of specific commitments relating to income tax. These include the commitment that, “from Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates.” In addition, the PfG states that “the Earned Income Tax Credit will be equalised with the employee tax credit”. It also includes a commitment to increase the Home Carer Tax Credit to support stay-at-home parents and those with caring responsibilities.

Significant progress has been made in achieving these commitments. For example, over the last three Budgets the Government increased the Standard Rate Cut-Off Point for single persons by 19 per cent from €35,300 to €42,000, with commensurate increases for persons who are married/in civil partnerships. In addition, the main tax credits - personal tax credits, employee tax credit and earned income credit - were increased by around 13.6 per cent or €225 each from €1,650 to €1,875. The Home Carer Tax Credit was increased by €100 from €1,700 to €1,800 (a 5.9 per cent increase) in Budget 2024. It is also worth noting that the earned income tax credit was equalised with the employee tax credit in 2021.

As Ireland’s fiscal position is heavily reliant on volatile ‘windfall’ corporation tax receipts, it is important that a balanced and sustainable fiscal policy continues to be pursued. Government will set out the fiscal parameters for Budget 2025 in the Summer Economic Statement in the coming months. These parameters, and the commitments outlined in the PfG, will inform my decisions in regard to the make-up of the Budget 2025 income tax package.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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104. To ask the Minister for Finance if he will reconsider his plans to reinstate higher excise on fuel in August; if he will outline, given the increased costs of living on ordinary people, what the cost impact will be on households and business from increasing taxes on fuel; and if he will make a statement on the matter. [22763/24]

Michael McGrath (Cork South Central, Fianna Fail)
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The Government is conscious of the implications of fuel costs for all sectors of society. This is reflected in the fact that in 2022, in light of the acute impact rising prices were having on households and businesses, the Government provided for temporary cuts in excise rates which, inclusive of VAT amounted to 21 cents, 16 cents and 5.4 cents per litre on petrol, auto-diesel and marked gas oil, respectively.

These temporary cuts to excise rates were initially due to end on 31 August 2022, but following review and monitoring of fuel prices, were extended until February 2023, with a phased restoration of rates occurring in June and September 2023. A final restoration of excise rates was due to take place on 31 October 2023, but Budget 2024 provided for further extension until 31 March 2024, with phased restoration occurring in April and August 2024. The first of these restorations took place on 1 April 2024 adding 4 cent per litre to petrol, 3 cent per litre to auto diesel and 1.7 cent per litre to MGO.

The remaining temporary reductions on a VAT inclusive basis amount to 4 cent per litre for petrol, 3 cent per litre for auto diesel and 1.7 cent per litre for MGO. These are currently legislated to be restored on 1 August 2024.

While I recognise that households and business continue to face challenges, the Government must strike the appropriate balance between providing support and avoiding fuelling cyclical inflationary trends. The Government has provided relief to consumers and businesses since 2022 through a number of support measures including temporary reductions in excise. However, these measures were introduced as temporary support measures and involve an ongoing cost to the exchequer while they are retained.

Finally, the Deputy should note that I will continue to monitor and review the position in the coming weeks in the context of the final phase of excise rate restorations due to take place in August 2024.