Bruton: Cutting income tax is an important objective

Cutting income taxes is an “important objective” for the Government, according to Enterprise Minister Richard Bruton, who said it must be “factored into thinking” on job creation.

The Fine Gael minister put himself on a collision course with his Labour colleagues by ruling out tax increases for high earners.

Mr Bruton said doing so would damage job creation by putting foreign companies off investing in Ireland.

“What we need to see is progress over time so we aren’t so dependent on a large wedge between what people are paid by employers and what they take home,” he said.

There have been “very sharp increases in the tax burden on income and I think people are struggling with that”, he said.

Asked if the Government would take action to reduce income tax, he said: “This is one of a number of proposals that need to go to Government and be factored into thinking; not immediately but it is clearly an important objective.”

Labour’s hopes of a 3% hike in the universal social charge on salaries of over €100,000 was rejected by Fine Gael in the run-up to the last budget.

But the measure is still on the table as far as Labour is concerned. It is likely to be revisited when Eamon Gilmore tries to put his party’s stamp on the next budget, due in October.

Labour TD Aodhán Ó Ríordáin said: “Rates of effective tax are comparatively low, particularly for those on higher incomes.”

He said an easing of the burden must be aimed at low earners. “As our fiscal situation stabilises further, and as we move towards regaining our economic sovereignty, the Government should be looking at adjusting income tax bands and allowances, so we can keep more money in people’s pockets.”

But asked if high earners could be charged more tax to ease the burden on the lower paid, Mr Bruton said: “A switch like that wouldn’t reduce the tax wedge at all, it would only be changing the make-up of it.”

He said that as the Government tries to create more jobs, it has to be “very conscious” that the already high taxes on income has put companies off investing in Ireland.

Mr Bruton was speaking in response to the publication of Forfás’s annual study on the costs of doing business, which contains a raft of recommendations for furthering cost competitiveness.

The enterprise and trade advisory board called for more action on lowering business-related costs, saying that, despite declines in recent years, Ireland remains “out of line” in many key cost competitiveness areas with European neighbours.

Mr Bruton said: “We have to be alert to a number of areas to make sure we are competitive over time.”

He said progress was being made on improving competitiveness and creating jobs but that “we can’t take that turnaround for granted and we are always battling for the next job with investors”.

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