Labor criticizes Paschal Donohoe’s income tax pledge as a ‘race to the bottom’
The Labor Party has criticized Finance Minister Paschal Donohoe’s pledge to raise the threshold for the higher income tax rate, which would put around € 600 a year in the pockets of workers.
Party finance spokesman Ged Nash TD called Finance Minister Paschal Donohoe’s comments in the Irish Independent bad for our economy and society.
Mr Donohoe said tax cuts would be a key aspect of budgets over the next three years, amid rising costs of living and competition from other EU states that attract workers with lower taxes.
But Mr Nash said: “The minister’s promise to embark on a crusade to cut taxes is the wrong thing to do. It is an overtly populist attempt to buy people’s support with their own money. This money would be better spent on making education free and reducing hospital waiting lists. “
“The timing of the minister’s intervention is interesting the day after a very bad poll for Fine Gael. The Fine Gael is clearly scared and is now embroiled in a populist race to lower taxes to match SF’s hugely irresponsible carbon, property and USC frenzy.
“At a time when we should be broadening, strengthening and modernizing the tax base, some are seeking to reduce it.
“We risk having a race to the bottom here. We all know what the Irish economy needs now are additional investments in areas such as housing, health, infrastructure and climate adaptation, not tax cuts of just a few euros per week.
“These are the points raised by the Irish Tax Advisory Board. These tax cuts are more reminiscent of dangerous policies pursued in the early and mid-2000s.
“It will be difficult to take Minister Donohoe seriously the next time he speaks about the size of the national debt or the need to control public spending.”
Mr Donohoe had previously told the Irish Independent that the maximum income tax rate could be lifted to € 40,000 over the next three years, thereby reducing the amount the government takes from wages.
“We have the potential to hit around € 40,000 for the higher tax rate, which means repeating the kind of steps we took in the recent budget.”
These tax cuts will allow a single person earning around € 45,000 to earn an additional € 415 per year. Starting in January, a single person will pay 40% income tax on all income above € 36,800 after the minister raised the entry point of the maximum rate to € 1,500 in the budget.
However, raising the highest rate, to incomes above 40,000 €, would be worth more than 600 € per year for workers each year.
But Mr Nash said: “What is the point of setting up a commission of experts at great expense, if you have already made up your mind on which direction to take?”
“The Fine Gael are clearly frightened by Sinn Fein’s relentless fiscal populism in light of recent opinion polls and appear determined to follow them in this direction.
“This for me, however, has to be the decade in which we get good economic, public and climate policies. Labor will not join any of them on the short-term path to populism. “