Workers on €15,300 to start paying income tax
The tax base is to be widened with relief on pensions’ savings slashed over the next three years as the Government tries to take in an extra €1.9 billion.
Workers will be hit with two-thirds of the reforms next year as Ireland attempts to move one rung from the bottom of the EU tax ladder.
The hikes will see the tax net open at €15,300, compared to €18,300 where it starts now.
In pay cheque terms that means a single person earning €55,000 will see their salary fall by €1,860 a year, or €36 a week.
A one-income married couple on the same wages will see their take home pay fall even further, €2,310 a year, or €44 a week.
The Government said the tax base had been eroded to unsustainable levels during the Celtic Tiger with the burden falling on a smaller number of people. It now aims to put income tax levels back to 2006 levels.
“Those who can pay most, will pay most — but no group can be sheltered. All taxpayers must contribute,” the Government warned.
SIPTU president Jack O’Connor described the National Recovery plan as a “roadmap to the Stone Age”.
“It penalises low incomes including those on the minimum wage,” he said. “Although we do not know figures until the budget, huge numbers of people on very low incomes are going to brought into the tax net.”
He said there was nothing in the plan which suggested significant taxes on the assets of the wealthy, those earning incomes in excess of €100,000.
“Perhaps one of the most frustrating elements is that there is no apparent stimulus or any intent to inject growth into the economy,” he said. “Public investment in capital expenditure has been reduced. They have taken €14.5bn out of the economy over the last three years and intend to take €15bn over the next four years as well as introducing measures to reduce disposable income. The cuts already introduced have deepened the recession and this latest plan will only deepen it further. ”
Small firms lobby group ISME branded the four-year plan as “a mixed bag”.
“While the decision to widen the tax base will provide an element of certainty to future tax revenues, there is concern that the level of income tax increases will act as a deterrent to employment creation and maintenance, reduce spending and slow economic growth,” the organisation added.
The move to widen the tax base was necessary, the report stated, stating the current level of 45% outside the net was “unsustainable”.
“The overall burden and incidence of income taxation has increasingly fallen on a relatively small number of taxpayers. In 2010, we have reached a point whereby just 8% — earning €75,000 or more — will pay 60% of all income tax, while almost 80% earning €50,000 or less contribute just 17% of income tax,” the report added.
