Varadkar proposes 30% tax band to help squeezed middle-income earners

Tánaiste has warned that high levels of inflation could last for at least another two years

Tánaiste Leo Varadkar: 'Looking at the pros and cons of a middle rate tax band. Picture: Sasko Lazarov / RollingNews.ie

A new middle rate tax band has been put forward by the Tánaiste in a bid to help cushion the blow of inflation on the squeezed middle.

Leo Varadkar has warned that high levels of inflation could last for at least another two years and suggested that a third 30% rate of income tax could help middle-income earners.

Mr Varakdar has now requested that Finance Minister Paschal Donohoe examine whether this new rate of tax could be introduced.

“We are a low tax economy in the round, but we are not low tax when it comes to income tax, particularly for people on middle incomes, those who earn more than €38,000, couples who earn more than €60,000 or €70,000," he said.

“One thing we should take a look at, and I have asked Minister Donohoe to look at the pros and cons of it, is whether we should have a middle rate of 30% because you do suddenly go from 20%  to 40%.

"There might be a case for having a middle rate of 30% for people on middle incomes so that you wouldn’t maybe get to that highest rate of 40% until you earn a little bit more,” Mr Varadkar told the Institute of International and European Affairs (IIEA)

On the rising cost of living, he said:

We have not seen this [inflation] phenomenon since the early 1980s.

"While I might not agree with the exact numbers, I agree with the ESRI’s assessment that the spike in inflation is not temporary. It could go on for two years or more."

Meanwhile, Mr Varadkar told his own party members that up to 40,000 refugees could arrive here before the end of April and the Government must find them housing.

He updated the Fine Gael Parliamentary Party meeting on Ukraine, expressing his horror at the situation and in particular the war crimes being committed in Mariupol.

The Tánaiste said the Government are also working to mitigate the increase in the cost of living with €1bn in supports for people.

He also expressed concern about the current surge in Covid cases, reporting that Blanchardstown Hospital was very busy on his recent visit, but noting the situation is similar to a bad flu season.

He told the meeting that CMO Tony Holohan and public health experts do not see the need for increased restrictions as Omicron is less severe and the Government doesn't impose economic and social restrictions for a bad flu season.

However, he told party members that they must encourage everyone to get their third dose and said that advise must be sought from NIAC on the fourth dose.