Neale Richmond
Question:250. Deputy Neale Richmond asked the Minister for Finance when a review of the tax bands will take place; and if he will make a statement on the matter. [23296/20]
View answerTuesday, 15 September 2020
Questions (250)
Written answers
The stabilisation of the economy from 2015 to 2019 allowed for reductions in the personal tax burden introduced in five successive Budgets. It focused on reductions to income tax targeted at low to middle income earners. The lower rates of Universal Social Charge were reduced from 2%, 4% and 7% to 0.5%, 2% and 4.5%, respectively. The income tax standard-rate band was increased by €2,500 from €32,800 to €35,300 for single individuals and from €41,800 to €44,300 for married one earner couples, and the higher rate of income tax was reduced from 41% to 40%. By making these changes, the Government made steady and sustainable progress in reducing the income tax burden for low and middle income earners by concentrating on increasing the level that workers pay the marginal rate of income tax.
The Programme for Government ‘Our Shared Future’ contains a number of specific undertakings with regard to personal taxation, including:
- There will be no increases in income tax or USC rates.
- In Budget 2021, there will be no change to income tax credits or bands. From Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be indexed linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low-income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates.
The extent to which it may be possible to make progress in this regard will depend on prevailing economic circumstances.
During the current crisis, the Government’s priority is to ensure that assistance is given to employees and businesses in a sustainable and affordable manner. Even though many of the strictest public health restrictions on the economy have been eased, economic outputs are unlikely to return to normal for many businesses for much of the rest of 2020 because of the continued need to observe some requirements such as social distancing.