High earners hit with 3% income levy in new Finance Bill

The government has rowed back on some of the measures announced in October's Budget.

The changes are contained in the new Finance Bill, which was published in Dublin this afternoon.

High earners will have to pay a 3% income levy, while those on incomes up to just over €18,000 will be exempt from the levy entirely.

There will be a 1% levy in incomes up to €100,000, rising to 2% between €100,000 and €250,000

Finance Minister Brian Lenihan said that rich exiles would also have to pay more to the exchequer:

“At present if a person resides in Ireland for more than a specified number of days, over 180 days, then that person must pay income tax in Ireland,” the minister said.

“There has been criticism of the fact that a person can arrive in Ireland and spend a substantial part of the day in Ireland, leave before midnight and that does not qualify as a day.”

“I'm changing that rule. I think all sections of the community have to play their fair share”

Tax Director with the Institute of Chartered Accountants in Ireland, Brian Keegan said the Bill contained very few surprises:

“This Bill is all about consolidating what was in the Budget.

“We'll often find in Finance Bills there will be new measures and new incentives introduced, but they are very few and far between.

“A lot of this Bill has to do with internal housekeeping and ministerial procedures, and we're not seeing the kind of new incentives or approaches that we might have expected given the seriousness of the current economic situation.”

Fine Gael's Finance Spokesperson Richard Bruton said it was the last piece of the deeply flawed jigsaw that was the Budget:

“What we see in the Finance Bill today is €2,500 in extra taxes on every family in the country on average, in 17 new taxes.

“We're one of the few countries in the world which is responding to the deep recession that's facing us by increasing taxes, and the reason for that is that the Government sabotaged our ability to deal with the recession by their reckless spending in recent years.”