1% income grab on cards

Minister for Finance Brian Lenihan may opt this afternoon for an income levy in his hairshirt Budget instead of upping the 41% top tax rate, according to a leading economic expert.

Speculation is that 1% will be levied on all incomes — regardless of what rates a person pays — the lower tax rate of 20% or the higher 41%.

A 1% ‘temporary’ levy would raise money quickly for the cash-strapped Exchequer rather than going down the road of raising the standard or higher rate of tax.

There would also be a 2% levy introduced for those on big salaries.

“An increase in levies would bring in twice as much as the tax rates,” said Fergal O’Rourke, a tax Partner, PricewaterhouseCooper.

No Minister for Finance has increased the two tax rates in the last 25 years.

“A levy makes more sense,” said Mr O’Rourke.

It was pointed out that Mr Lenihan is still in the dark as to what will be the total tax take from the self employed as these returns, many of them filed online with the Revenue Commissioner, will not become available until later this month or early November.

If these company tax returns were a disaster, it could raise the prospect of mini-Budget in the new year, as happened in the 1980s with more post-Budget cuts a possibility.

Article courtesy of the Evening Echo newspaper.

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