Lenihan relies on income tax levy to rescue finances

A MUCH-PREDICTED but little welcomed income levy taking €1 out of €100 earned by every worker in the country was the centrepiece of Brian Lenihan’s crisis budget which relies heavily on household tax increases to generate revenue.

The levy will hit even those currently earning too little to pay standard income tax while at the other end of the income scale, it increases from 1% to 2% on any earnings over €100,000.

A tax by another name, it was one of a wide range of tax increases announced by the minister for finance who also raised the standard rate of VAT which applies to practically all consumer goods and services from 21% to 21.5%.