50,000 workers caught in top tax net

THE numbers caught by the highest rate of tax rose by more than 50,000 this year.

The increase is attributed to the Government's failure to properly index tax bands and led to accusations that middle-income PAYE workers are not benefiting from tax relief.

At this stage, three in every 10 taxpayers, 570,000 people, are paying the 42% rate. Figures from the Revenue Commissioners show the number in the top bracket is at its highest point this decade greater even than at the height of the economic boom.

But the figures may include a large number of couples who are jointly assessed. Married couples get better tax breaks. Answering queries from Labour Party finance spokeswoman Joan Burton, Finance Minister Charlie McCreevy said the figures for 2003 have been revised from those quoted in the Budget to take account of up-to-date information.

"A married couple who have elected, or have been deemed to have elected, for joint assessment is counted as one tax unit," the minister said.

Ms Burton said the rise from 27.9% of taxpayers paying the highest rate to 30.5% was dramatic and was caused by Mr McCreevy's taxation policies. "That is an extra 53,000 taxpayers moved into the 42% rate thereby reversing much of the gains made by PAYE workers in 2001 and 2002.

"The reason for this increase is the failure of Mr McCreevy to properly index income tax bands in the last Budget and is indicative of the stealth tax approach adopted by this Government in Budget 2003," she said.

Yet the rise in the number of taxpayers coming under the 42% rate is in stark contrast with the treatment of capital gains tax and includes speculative rezoning profits being subject to just a 20% rate, Ms Burton said.

"It also contrasts with the Revenue's 2002 High Earners' Report on the top 400 taxpayers recently which showed they benefited from E70 million in various property-based capital allowances," she said.