Income levy to be increased
Library/Getty Images
Workers are likely to be hit with increases to income levies as the government seeks to raise € 5b in the April budget. (Picture posed for by model)
Workers are facing hikes in the income levy on April 7, under what is being called the ‘toughest budget in Irish history’.
Yesterday, the Cabinet held the first in a series of pre-Budget meetings in an effort to find €5bn in cutbacks and tax hikes.
The income levies of 1pc, 2pc and 3pc look likely to be increased in order to achieve a boost in revenue immediately after April 7’s mini-Budget.
Hiking the income levies is an easier and quicker revenue-generating option than income tax rate changes, which can take more than six weeks to implement.
Currently, the levy is charged at 1pc on incomes up to €100,000, 2pc on the balance up to €250,000, and 3pc on any income over €250,000. The levies are expected to generate €800m this year at their current rates.
Increases in the income tax rates of 20pc and 41pc may then follow in January, with a possibility of the income levy then being phased out, sources close to the Budget claimed last night.
Yesterday in Government Buildings, Minister for Social and Family Affairs, Mary Hanafin, continued to soften the public up for welfare cutbacks, which are expected to come in the areas of the early childcare allowance and child benefit.
She signalled that her department’s €21bn budget will be hit under the latest rounds of cutbacks. “Naturally, it’s a priority for the Government to protect the most vulnerable but we can’t ignore the fact that that budget is so big,” she said.
At yesterday’s five-hour Cabinet meeting, ministers discussed an “options paper” from the Department of Finance on how to raise up to €6bn and a draft report from economist Peter Bacon about the creation of a “toxic debt firm”, which would take over bad property loans from the banks.
