A REDUCTION IN income tax is needed to boost consumer spending as many employers can not afford to increase wages this year, IBEC has said.
The organisation’s CEO Danny McCoy made the call ahead of the CEO Conference 2014, saying that reducing the tax burden is key to improving economic activity.
“Hard working families need a break”, he said, “At 52% we now have one of the highest marginal tax rates in the OECD, well above the average of 36%.”
“It also kicks in at a low income level.”
Among the wide range of suggested reductions, McCoy has also said that the pension levy should be scrapped, as well as excise increases which are “way out of line internationally”:
This would boost sentiment, support domestic economic activity, and ultimately lead to higher exchequer returns.
It follows comments by Minister for Finance Michael Noonan that he was considering widening income tax bands in order to bring more people into the middle bracket.
However, Social Justice Ireland has slammed the suggestion, saying that “under no circumstances should tax bands be changed” as it would not benefit low earners.
Instead, Director Sean Healy said that a system of refundable tax credits would be more beneficial.
“Such a move would make Ireland’s tax system fairer, address part of the working poor problem and improve the living standards of a substantial number of people in Ireland,” he said.
“It would ensure that Ireland’s income tax system treated everybody equitably and fairly.”
He said the move could be implemented at a “modest cost”.
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