Enda Kenny’s US-style income tax plan strongly rejected by Labour Party

Plans by Taoiseach Enda Kenny to move to US levels of income tax have been strongly rejected by the Labour Party.

Labour ministers voiced their opposition yesterday to Mr Kenny’s comments — a clear sign of differences opening up between the coalition parties ahead of the general election.

Communications Minister Alex White rejected Mr Kenny’s plans, saying they would leave public services without adequate funding.

Asked did he want to see US-style taxes in Ireland, Mr White responded: “No I don’t. I don’t believe low taxes would allow us to do what we need to do, which is invest in public services and invest in our future.

“We will need to have good education, good infrastructure and proper health services. We should all be extremely careful as we have all learned lessons about making promises. We want to reduce taxes and people deserve that, but not in a way that impoverishes the State.”

Senior party sources have said Mr White and other Labour ministers will find a number of key issues on which they will seek to differentiate Labour from Fine Gael in a bid to salvage as many seats as possible ahead of the election, which is expected to be held on Friday, February 26.

Enda Kenny

Asked did he think the disagreements on issues like taxation were confusing to voters, Mr White said the parties have shown an ability to “hammer out” differences and keep the Government afloat.

“What we have are two parties capable of working together to restore the economic sovereignty of this country. Yes, if you look at the issue of taxation and public spending, there will be different views,” he said.

Mr Kenny promised to slash income taxes across the board to bring Ireland in line with low-tax countries such as the US and UK.

The pre-election pledge would, if implemented, cut the personal tax burden of Irish workers by thousands of euro a year. Mr Kenny insisted that the first step in competing for jobs with low-tax countries is to abolish the hated USC “over the next six budgets”.

He said it is “essential” that Ireland competes with low-tax countries, naming Britain, the US, Australia, and Canada as our main competitors.

“If we want to compete with other lower-taxed countries we have got to be able to make a similar offer ourselves, and that is why it is absolutely critical that the forward momentum of the Irish economy be kept going,” said Mr Kenny.