The Taoiseach has said he is “not hung up” on the introduction of a 30 per cent tax band to help squeezed middle earners.
Leo Varadkar said he is “determined” to make policy changes to ensure people can earn up to €50,000 a year without having to pay the highest rate of income tax.
He added that whether that comes about by increasing the standard rate cut-off point or by the introduction of a middle tax rate of 30 per cent will have to be decided at Cabinet.
Mr Varadkar proposed the introduction of a new middle rate tax band last March as a way of helping middle income earners.
He asked then minister for finance Paschal Donohoe to examine the pros and cons of a new rate.
Asked whether a 30 per cent rate will be introduced now he has become Taoiseach again, Mr Varadkar said it is “really important” that the Government helps working people with the cost of living, with a combination of pay rises and income tax reductions.
“I believe that work should pay,” Mr Varadkar said. “And I think that in Ireland people have to pay the highest rate of income tax on very modest incomes.
“We’re getting to [a standard rate cut-off point of] €40,000 next year. I’d like to move that up.
“The policy objective that I have set is that we should get to the point where people can earn up to €50,000 a year without having to pay the highest rate of income tax.
“It might take a few budgets to get there. But I’m determined that we should, whether we do it by increasing the standard rate cut-off point or by a middle tax rate.
“I’m not hung up on that and I never have been. But that’s something obviously we’ll have to discuss at Government level between now and the next Budget.
“But certainly, if the public finances allow it, I would like to see us continue on that road, so that you will be able to earn more without having to pay the highest rate of income tax.
“We’ve moved a long way in the last couple of years on that. And I want that to continue.”
