‘Tax proposals could give almost €1,000 extra to top earners’
The Independent group, Social Justice Ireland, made the claim after examining suggested coalition tax band alterations put forward during the Fine Gael ard fheis.
Under the possible plans, which may play a role in next year’s budget negotiations, the Fine Gael-Labour Government has proposed widening the 20% income tax band to include more people and reducing the top level 41% tax rate to encourage more high earners to spend their money.
However, Social Justice Ireland has claimed neither of the potential policies will close the gap between the rich and the poor in this country.
Launching the research — which is available at www.irishexaminer.com — last night, the group’s director, Dr Seán Healy, said the 41% tax rate change would net those earning €125,000 an extra €922 a year but would nothing for people on less than €32,800.
He said that a similar problem exists for the 20% tax band change.
Dr Healy claimed the only reasonable and practical alteration to the current tax levels is to increase tax credits — a move that would “provide the same value to all taxpayers provided they pay more than €108 in income tax”.
“The Government’s tax proposals, made over the weekend, should be rejected because they would give all the benefit to those earning over €32,800 while giving nothing to those earning less than that amount,” Dr Healy claimed.
“Under no circumstances should the 20% income tax band be widened or the top tax rate reduced in the next budget,” added the organisation’s research and policy analyst, Michelle Murphy.
“The poorest 10% of society lost most since the onset of the crisis. A widening of tax bands as proposed by Finance Minister Michael Noonan would not improve their situation, but would increase inequality and widen the rich-poor gap,” she said.
Mr Noonan has previously said he wants to reduce the 41% income tax rate for high earners as it is “damaging job creation” nationwide.
However, Social Justice Ireland said reducing taxes should not be the Government’s priority for Budget 2015. Instead, the group said “available money should be used to improve Ireland’s social services and infrastructure, reduce poverty and social exclusion and increase the number of jobs”.
“Making tax credits refundable is the fairest and best option for changing the income tax system.
“By making tax credits refundable the full value goes to everybody who has an earned income,” the group said.
