JOAN BURTON BELIEVES that the best way of reducing the tax burden on low and middle income earners is by adjusting the point at which they enter the higher rate of tax.
But that view does not appear to be shared by Enda Kenny who wants to reduce the top marginal rate of tax.
In recent days, both the Taoiseach and the Tánaiste have been discussing potential future tax cuts in the next Budget and beyond if the coalition is re-elected. But the two coalition party leaders don’t appear to be agreed on the best way to ease the tax burden.
In a speech at a ConnectIreland event in Dublin yesterday, Kenny said that the rate of tax on middle income earners will be reduced to “at most 50 per cent” in the next Budget.
He said that the rate of income tax – which will be down from 41 to 40 per cent from 1 January next year – would also be reduced in subsequent budgets.
“Cutting the high rates of personal taxation is essential for Ireland’s recovery,” he said.
But speaking to reporters at Government Buildings earlier in the day, Burton said that Labour was focussed on tax reforms for low and middle income workers and taking people out of the taxation altogether.
“I can appreciate that for some people, say earning €100,000 plus, tax reductions in the income tax rates would be very attractive,” she said.
“But I think that in terms of boosting an economic recovery right around the country we really do have to look at the point at which people enter the top tax rate. That’s a difficult feature of our tax system,” she said.
She said that adjusting the bands was not as “catchy” as talking about cutting tax rates but said that changing them results in “effective reductions to where they’re needed most”.
Asked if she believed it was wrong to talk about cutting the effective rate of tax as Kenny is doing, Burton pointed out that “Fine Gael as a party and the Labour party as a party are two separate parties”.
She added: “We reached an agreement in July, myself and the Taoiseach, that we would emphasise in the programme for the rest of this government… low and middle income families getting the bulk of the targeted relief and the arrangements this year were to precisely do that.”
She said the “biggest anomaly in our tax system” is that single people enter the higher rate of 40 per cent even if they’re earning the average industrial wage.
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