Labour vows to slash tax by a third

Labour has promised to reduce taxes for workers on €25,000 by as much as a third as part of a €3bn tax reform package, if returned to power.

Workers on up to €50,000 would also see their taxes reduced by up to 15% under the promised reforms.

Public Expenditure Minister Brendan Howlin unveiled the tax-cut promise yesterday evening in Mullingar, ahead of Labour’s conference here today.

The plan would put more than €1,000 a year back into the pocket of a worker on €25,000. However, a high earner on €120,000 or more would not see any reductions in their tax obligations.

As part of the pre-election promise, Labour says USC would be abolished on incomes up to €72,000. Workers would also pay less PRSI once their income amounts to less than €704 a week.

Any gains under the changes for higher earners would be clawed back by adjusting their tax.

Announcing the changes, Mr Howlin said the USC was the “most draconian of the charges” introduced during the recession. However, Labour still wanted to keep a broad tax base and would limit reductions.

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Under the proposals, a worker on €25,000 would see joint reductions in USC and PRSI result in a €1,132 saving annually, or €22 per week.

A worker on €50,000 would see €2,043 saved a year or €39 per week . Someone on a salary of €72,000 makes a saving of €3,302 or €63 per week.

Labour stressed that higher earners would see gains clawed back.

Someone on €120,000 might see USC reductions of €3,302 but these would be cancelled out by income tax-related increases.

Mr Howlin also responded to calls for the next government to have a “rainy day” fund, saying that Labour had financial plans, though this was an unallocated amount, if Ireland faced future economic challenges.

The minister would not be drawn though on what exactly these funds were, or how much.

The Irish Fiscal Advisory Council yesterday warned that the projections for increased spending by the next government were incorrect, and were several billion euro short of what was being promised by parties wanting to be in government.

With just days to go before the expected announcement of the election, Labour TDs and delegates will today discuss jobs and healthcare, among other issues, before party leader Joan Burton gives the main address at the conference tonight.

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