Varadkar pledges income tax cut for Irish workers

19 Nov 18

The Irish prime minister has pledged to cut incomes taxes paid by average earners.

Speaking on Saturday, Taoiseach – the Irish name for the country’s prime minister – Leo Varadkar said, if re-elected, he would raise the threshold for the top tax rate (40%) from €35,000 to €50,000.

The move would save workers up to €3,000 a year and is part of a wider tax strategy that includes savings for the self-employed, stay-at-home parents and carbon tax credits.

Ireland started reversing years of spending cuts and tax hikes in 2014 but many people are still taxed the top rate of tax on a below average full-time income. According to the Irish Central Statistics Office, the average wage for full-time workers in 2016 was €45,611.

At his Fine Gael party’s annual conference, Varadkar said: “We have managed to reverse much of that unfairness [spending cuts and tax hikes], but some elements persist.”

He committed to increasing the threshold to €50,000 over the next five budgets, a move that would cost approximately €600m per year.

Varadkar, who took office in 2017, argued the high tax rate “discourages parents from returning to the workforce, discourages people who emigrated from coming home, and makes it harder to attract good jobs and talent to Ireland”.

He added: “It is holding our country back.”

The pledge is mostly dependent on Fine Gael winning re-election. Varadkar is in talks with the main opposition party to renew an expiring cooperation deal for one more budget before an election he wants set for mid-2020.

  • Professor Irfan Bora

    Rutgers’ director of the master of accountancy in governmental accounting program

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