The policy development of widening the standard rate tax band has been debated at length in this house and elsewhere since Budget 2000. The Deputy will be aware that part of the context for the policy changes with respect to band widening that I introduced in Budget 2000 was the Government's target that at least 80% of taxpayers should not be subject to the higher rate of tax. In my statement on Budget 2000 I pointed out that one of the chief problems with the taxation system was the low level of income at which single people became liable to the top rate of tax and that single people who were on incomes less than the average industrial wage were paying tax at the top rate. The aim of the initiative on completion was to reduce the percentage of taxpayers on the top rate of income tax to 17% or 12% if exempt cases are included. The Deputy will also be aware that the policy of establishing a single standard rate band for all individual taxpayers was supported by the social partners in the Programme for Prosperity and Fairness. The social partners also support the target that at least 80% of taxpayers should not be subject to the higher rate of tax.
I understand that the NESF report, which is referred to in the question, deals with the alleviation of labour market shortages – it does not concern taxation matters as such. However, the report, in its references to taxation, indicates "support in principle for moving to more individual taxation". It also acknowledges that widening of the tax bands is in itself progressive. To complement band widening, as part of an overall tax reform package, the report suggests that measures be adopted for those on lower incomes and/or all taxpayers equally.
