Kenny pledges three years of tax cuts

Three consecutive years of tax cuts are on the way, starting with the 52% rate the Taoiseach said — laying the foundation for the Coalition’s bid for a second term in office.

Enda Kenny said his Government will “start the process” of reducing the 52% marginal rate of tax in next month’s budget and continue to reduce it “not just in the next budget, but in the budget after that and the one after that again”.

However, an independent think-tank Tasc, said cuts to the 52% marginal rate —which includes the 41% income tax rate, PRSI and the universal social charge — would only help the top one in six earners.

Its research director, Nat O’Connor, said that the Government was being “misleading” by suggesting it would help low- and middle-income families.

“Only 17% of those paying income tax are paying at the higher rate. A cut to the 41% tax rate really benefits those on the highest incomes. Even then, people who pay only a small share of their income at the higher rate will only see a small benefit,” said Dr O’Connor.

Mr Kenny, speaking in Mitchelstown, Co Cork, said that the recent positive growth rates suggests that the Government now has some scope to begin reducing the tax burden.

But he warned that, despite better than expected growth figures, “we do not have the liberty to do all that we might like to do”.

Jobs Minister Richard Bruton joined the Taoiseach, Agriculture Minister Simon Coveney and Minister of State Seán Sherlock at the announcement of 115 jobs in Dairygold’s plants in Mitchelstown and Mallow. He said that the 7.7% growth in GDP in the year to the end of June was encouraging.

“If you go beneath that you see exports growing at 13%; you see investment at 18%; you see building and construction showing its first signs of growth. What you are seeing is recovery that started with exporting is now embedding in the wider economy,” Mr Bruton said.

“There’s no doubt about it, when we go competing for new projects, employers in boardrooms look at the so-called tax-wedge. We have a high rate at 52% and it has hit people on very modest incomes.”

Meanwhile, employers group Ibec wants the Government to “frontload” any stimulus package for the economy rather than spread changes out over several budgets. Group CEO Danny McCoy said changes to tax rates were “crucial” to boost economic growth.

Changes to where workers begin to pay the 41% higher rate in income tax would send out a “strong signal” to investors, Ibec said. There was also the potential to reduce the marginal rate itself, it said.