Dáil Éireann Debate, Wednesday - 9 November 2016
96. Deputy Paul Murphy asked the Minister for Finance his views on the relatively low increase in the income tax take in 2016 despite the rise in employment; his views on whether this points to the need to increase wages of low and middle income workers; and if he will make a statement on the matter. [34042/16]
Amharc ar fhreagraBudget 2016 estimated that overall income tax receipts for 2016 would amount to €18,995 million, which represents a 4.4% year-on-year increase. Budget 2017, published last month, also projected annual growth in income tax for 2016 of 4.5%, with receipts of €19,185 million expected. This is an additional €190 million above the Budget 2016 estimate for this tax head.
Looking at the performance in the year-to-date, income tax receipts to end October 2016 are currently up 4.2% or €577 million year-on-year, but 0.6% or €94 million below profile. The performance of DIRT in 2015 was disappointing and this has continued in 2016 following lower-than-expected interest rates with receipts from this sub-component now c. €130 million below profile. Removing the impact of DIRT receipts from the income tax performance in the year-to-date would show overall receipts marginally ahead of profile, with almost one quarter of the annual income tax receipts profiled for the last two months of the year.
This indicates that the main elements of income tax continue to show robust year-on-year growth rather than a "relatively low increase" that the Deputy refers to.
As regards wage levels of low and middle income workers, I would remind the Deputy of the importance of safeguarding our competitiveness, particularly in light of the uncertainty presented by Brexit. In this regard, the Deputy will be aware of the significant depreciation of sterling over the past year or so, and the impact that this is having on our competitiveness. In order to protect jobs and prevent an increase in unemployment, it is paramount that wages move in line with productivity. Finally, I would highlight that inflation has been virtually non-existent this year, which is helping to protect real wages.
