Indexing tax credits and bands would favour high earners over low-paid, Social Justice Ireland warns

In its Summer Economic Statement, the Government committed to an overall Budget 2027 package of €8.5bn, with €7bn in additional spending and a €1.5bn tax package.

Several of the income tax reliefs most likely to feature in the upcoming Budget would deliver the bulk of their benefit to higher earners, Social Justice Ireland has warned and urged the Government to instead put the focus on increasing tax credits.

In a pre-Budget report, the think-tank compared eight possible income tax changes, each costing between €482m and €635m a year, or 1.2% to 1.6% of the State's annual income tax take. It found that just three would spread gains fairly across income levels: raising the personal tax credit, abolishing the 0.5% USC rate alongside a one-point cut to the 2% rate, and a stand-alone 1.25-point cut to the 2% USC rate.