Dáil Éireann Debate, Thursday - 16 June 2022
61. Deputy Richard Boyd Barrett asked the Minister for Finance the plans that he will put in place to ensure that the take-home pay of workers in the private sector is increased at least in line with inflation; and if he will make a statement on the matter. [31323/22]
Amharc ar fhreagraAs the Deputy may be aware, the Programme for Government states that “from Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index 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, and to ensure there is no increase in the number of people having to pay higher income tax and Universal Social Charge rates”.
The Government is very conscious of inflationary pressures and introduced a range of measures in Budget 2022 which included an income tax package amounting to €520 million, which, within available resources, sought to index the income tax standard rate bands and main personal tax credits. The single income tax rate band was increased by 4.2 per cent from €35,300 to €36,800 for the 2022 tax year, with commensurate increases for persons who are married/in civil partnerships. The main tax credits, personal tax credits, employee tax credit and earned income credit, were also increased by just over 3 per cent from €1,650 to €1,700 for the 2022 tax year. This is providing a real benefit to all individuals who pay tax by reducing their tax liability and ensures that some low and part time workers remain outside income tax net.
In addition, the 2% rate band ceiling for USC was also increased in line with the increase in the national minimum wage to ensure that a full-time adult worker who benefits from the increase in the hourly minimum wage rate will remain outside the top rates of USC.
I would point out that this Government has a put in place a package of targeted measures to address the cost of living increases. This brings the aggregate value of measures, including those in Budget 2022, to €2.4 billion.
I would also like to draw the Deputy’s attention to my opening remarks at the ESRI’s Budget Perspectives conference last Friday 10 June where I noted that “Budget 2023 is being prepared against the backdrop of rising borrowing costs; an inflation situation unlike anything we’ve encountered in over three decades; heightened economic and geopolitical uncertainty; and, a worrying exposure of revenue to corporate tax receipts.”
Further, as the Deputy will appreciate, the broad economic and fiscal parameters for the Budget in the autumn will be presented in the Summer Economic Statement. It is within this context and the overall macro-fiscal position that budgetary options, including those relating to income tax, will be considered.
