Leo Varadkar floats €3bn tax plan but rules out early election

He said the measure — to save workers up to €3,000 — was part of a wider tax strategy that included savings for the self-employed, stay-at-home parents, and carbon tax credits.

However, opposition parties said his pitch to voters was an “election gambit” and failed to address the crises in housing and health.

Mr Varadkar rejected this, insisting he was paying back the squeezed middle, who paid the vast majority of taxes.

“It’s not just the well-off, it is middle income people, middle Ireland,” he said. “It is people earning over €35,000 a year, it is teachers, nurses, gardaí, it is those with small businesses.”

And amid verbal sparring between senior Fine Gael and Fianna Fáil figures over the confidence and supply deal, Mr Varadkar denied trying to steer the country towards an early election.

“Most people will understand that calling an election, given the current instability and impasse around Brexit, would not be in the national interests even if it was in the party’s interests.”

Delivering his Fine Gael ard fheis speech on Saturday, Mr Varadkar promised, over the course of five budgets, to increase the point where people pay the top rate of income tax to €50,000 for a single person or €100,000 for a couple. Workers currently pay a top rate of 40% at just over €35,000.

The cuts would benefit more than 900,000 workers, leaving them after five years with €3,000 extra annually.

Quizzed about tax cuts eating up €600m a year in government spending, Mr Varadkar said money would also be found to help services such as health and housing.

“We will find space,” he said, denying the plan was taken out of a Fianna Fáil pre-election playbook.

Video by Daniel McConnell

“It [the tax plan] is dependent on the economy continuing to grow, that is a pre-requisite,” the Taoiseach told RTÉ. “If we did nothing, more people every year would fall into the higher tax net if, over time, they get promoted, pay increases, or increments.”

The tax cut promises have sparked accusations that the plan is not credible and is an early election bid by Fine Gael.

Fianna Fáil leader Micheal Martin warned Fine Gael to “cool the jets” on electioneering tax promises.

“Do you remember the last general election, the big promise? US-style taxes, the pledge of ‘we will abolish the USC’. That was a €4bn promise abandoned as soon as they got into Government,” he told the Fianna Fáil president’s dinner on Saturday.

Sinn Féin’s Pearse Doherty said the strategy was an “election gambit”, while Labour’s Joan Burton claimed it took no account of low-paid workers such as bus drivers or nurses. Social Democrats TD Catherine Murphy also claimed Fine Gael was “out to buy votes”.

The criticism came after Fine Gael figures at the ard fheis targetted Fianna Fáil, worsening relations between the parties amid attempts to renew the confidence and supply pact.

Health Minister Simon Harris said talks — moving into a fourth week — to extend the minority government’s lifeline to 2020 were moving at a “snail’s pace”.

“What could plunge the country into an election is if people don’t recognise that confidence and supply deal that expires in a matter of days,” he added.

Mr Varadkar agreed, saying talks on a renewal could be done and dusted over just one weekend.

“My sense is, if anything, rather than resolving this and deciding whether we want to have a confidence and supply agreement or not, Fianna Fail is kind of dragging it out a bit,” he said.

A declaration by Fianna Fáil’s John McGuinness yesterday that he would not renew the deal has now added to the impasse.

“The fact still remains we have a homeless crisis, a health crisis, and so on,” he told Virgin Media One. “I can’t stand by that agreement and say I’m happy and I’ll do another two years.”