Dáil Éireann Debate, Thursday - 19 December 2013
98. Deputy Terence Flanagan asked the Minister for Finance his views on the Industrial Development Agency CEO's remarks on our tax policy; his plans to cut income tax; and if he will make a statement on the matter. [54956/13]
View answerThis Government is very much aware that from an international perspective, Ireland is already considered to have a high top marginal rate of tax on income. When compared with other OECD members with a similar marginal tax rate, the Irish marginal tax rate for PAYE income takes effect when the standard rate band is exceed which is €32,800 for a single individual.
Marginal tax rates are important because they influence individual decisions to work more or indeed to work at all. The OECD working paper Tax and Economic Growth indicates that “there is also the possibility that high top marginal rates will increase the average tax rates paid by high-skilled and high-income earners so much that they will migrate to countries with lower rates resulting in a brain drain which may lower innovative activity and productivity” . Higher marginal tax rates for earners may also incentivise a greater level of tax evasion and contribute to the development of a shadow economy. This is why the Programme for Government contains a very specific commitment that “as part of the Government’s fiscal strategy we will maintain the current rates of income tax together with bands and credits. We will not increase the top marginal rates of taxes on income”.
As the Deputy will be aware all tax expenditures and reliefs are reviewed in the run up to annual Budget.
Question No. 99 answered with Question No. 97.
