Taoiseach promises tax cuts will be budget priority for ‘coping classes’

There’s good news on the way for the ‘coping classes’ next year, according to Taoiseach Enda Kenny, who promised that tax reductions for middle-income families will be a priority in Budget 2015 — depending on economic circumstances.

It’s the first time the Taoiseach has pledged relief for the so-called coping classes who have been hit by a series of tax hikes and other charges over the past five years.

“The priority will be to reduce the very high tax rates faced by families on middle incomes,” said Mr Kenny, who noted it would depend on the flexibility of the Government’s finances by next October. “The scope of any income tax reductions will not be known until much closer to the budget and they will depend upon growth rates and jobs opportunities,” he said.

With economic growth forecasts varying between 2% and 2.8% for 2014 and 1,000 jobs being created every week, it’s expected the Government may have scope for tax relief as it prepares for a €2bn adjustment for Budget 2015.

The most likely source of relief will be to increase the amount a person can earn before going onto the top rate of tax. Currently those on the average industrial wage of around €35,000 hit the top rate of tax at 41% more rapidly than most other countries.

Tánaiste Eamon Gilmore, Social Protection Minister Joan Burton, and Transport and Tourism Minister Leo Varadkar have all previously indicated their support for income tax reductions.

Household income is set to take a hit next year as householders will have to pay an average of €1,000 to cover a full year of the property tax, and water charges which will be introduced towards the end of the year.

However Mr Kenny insisted he would keep his promise in the Programme for Government not to increase income taxes.

He also said the report of the Advisory Group on Tax and Social Welfare will be completed by April.

“That is likely to focus on family income supplement, on child income supports and rent supplements, and on barriers faced by part-time workers moving into full-time employment,” Mr Kenny said.

A spokesman at the Department of Social Protection said 75% of those on social welfare receive no more than a single payment while 6% of families do better on social welfare than taking up a low-paid job.

However analysis by the Economic and Social Research Institute has shown the poorest in society were the second hardest hit in the six annual budgets since 2009 and that Budget 2014 will have a disproportionate effect on the less well-off in society.