Varadkar defends Fine Gael ministers over proposed tax cuts

Taoiseach Leo Varadkar (PA)

Taoiseach Leo Varadkar has defended the Fine Gael junior ministers who wrote an opinion piece advocating for tax cuts in the autumn budget.

Mr Varadkar, leader of Fine Gael, said the party was committed to cutting income tax as part of its effort to look after “middle Ireland”.

“We were very clear that our basis for participation in this Government is that middle Ireland gets looked after, and that’s looking after working people, it’s looking after business, it’s promoting things like home ownership,” he said in an interview. 

We think middle-income people pay too much income tax

“So we’d be very clear in this Government that we want income taxes reduced. We think middle-income people pay too much income tax.”

In an op-ed published this week Minister of State Martin Heydon and two other Fine Gael ministers – Jennifer Carroll MacNeill and Peter Burke – called for a full-time worker on a wage of €52,000 to get €1,000 back in tax relief in the next budget.

As the upcoming budget will be from Fianna Fáil’s finance minister Michael McGrath, the piece was seen to cause tension between the coalition parties.

On Friday Tánaiste and Fianna Fáil leader Micheal Martin said all coalition parties had signed up to reduce income tax under their programme for government.

He added: “I think government must act with coherence and collective Cabinet responsibility.”

Minister of State Martin Heydon (PA)

The Taoiseach confirmed that he had prior knowledge of the article and its contents, but said the choice to support the ministers in publishing the piece was not an attempt to associate Fine Gael with the tax cuts in the minds of potential voters.

“Well, look, you’re making out some sort of clever PR or political strategy behind this. There isn’t,” he told the Irish Times. 

“This is three Ministers of State who chose to write an article, and they did, and they made me aware of it before it was published. That’s what happened. There isn’t any cunning strategy behind this”.

However when speaking on the different parties’ demands on entering the coalition, he said Fianna Fáil would not increase the pension age despite it being the “fiscally prudent” option.

“Fianna Fáil [was] very clear on pension reform, that they didn’t want to increase the pension age, notwithstanding the fact that IFAC (Irish Fiscal Advisory Council) and others said that that was the fiscally prudent thing to do,” he said.

With the level of tax cuts proposed by the junior ministers estimated to cost upwards of one billion euro, Mr Varadkar said the overall tax package in the upcoming budget may need to be increased.

“I believe it does. I think we need to have a tax package in the forthcoming budget that is as good, or bigger than in the last,” he said.

Mr Varadkar added that despite his stated approval of the proposals laid out by the ministers, he would not tie himself to a specific policy.

“Just to be clear, the three ministers of state have made a specific proposal. I’ve been very clear that I’m not tying myself to any specific policy, I am tying myself to the programme for government commitment, which is that we index tax bands and credits. If we can afford to do so, I expect that commitment to be honoured,” he said.