Fianna Fáil finance spokesman Michael McGrath has said there is a need for tax cuts in Budget 2019 or workers will inevitably end up paying more to the state with higher wages.
Speaking in New Ross at the Kennedy Summer School, the Cork South Central TD said that “not giving a so-called tax cut means you have a tax increase.”
Debate is ongoing over whether the €800m extra available for next year should be spent on tax cuts on services.
Fine Gael want to reduce the high rate of tax for workers while the Opposition maintain that services such as health and housing desperately need funding.
Fianna Fáil, who support the government, also maintain more tax cuts and service funds are needed in 2019.
Mr McGrath told the audience today that wage rises would, in fact, push up tax payments for workers. Without any changes, this potentially could result in the exchequer receiving an extra €300m to €400m, explained Mr McGrath.
But just standing still and not reducing income taxes would see workers actually shouldering higher tax payments, he pointed out.
Nonetheless, Social Democrats TD Roisin Shortall said tax cuts would in the main amount to €5 a week for higher paid workers or a fifth of employees.
People wanted better services, she added, and reductions in the cost of insurance, more competition in the energy market and better housing.
Labour leader Brendan Howlin agreed. The Wexford TD also criticised the government's proposal to invest in the so-called 'rainy day fund'.
Arts Minister Josepha Madigan said the government wanted to reduce down taxes more. But there was a need to be “prudent with finances” and to try and buffer against Brexit, she told the audience.
Negotiations on the budget between Fianna Fáil and the government will resume next week.