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Fine Gael promises tax cut to leave many €3,000 better off

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Plan to ease tax burden. Photo: Andrey Popov

Plan to ease tax burden. Photo: Andrey Popov

Plan to ease tax burden. Photo: Andrey Popov

Fine Gael is promising a tax cut package that will leave many middle-income earners just under €3,000 better off after five years.

Around half of all households in Ireland will benefit from a plan to raise the threshold at which the higher rate of income tax is paid from €35,300 to €50,000 over five years, according to a briefing document prepared for Fine Gael in recent days.

A person who earns around €50,000 will be just under €3,000 better off after five years, it has been claimed.

A "fair tax plan" will be det- ailed in the Fine Gael manifesto to be published next week, with the income tax change costing €2.4bn over five years.

Taoiseach Leo Varadkar first promised to raise the higher rate threshold at the Fine Gael Ard Fheis in 2018. Its introduction was postponed amid fears over a hard Brexit.

However, Mr Varadkar told Fine Gael TDs and senators last week: "The fair tax plan that we'll put forward is one that is going to be for the many - for all taxpayers, all 1.7 million - not for the few."

The comments echo the "for the many, not the few" phrase coined by former British prime minister Tony Blair in the 1990s and more recently adopted as a campaign slogan by one of his successors as UK Labour leader, Jeremy Corbyn.

Sufficient

The briefing document says: "The annual benefit per earner at the end of five years is just under €3,000, which should be sufficient to ensure that tax levels keep up with projected income growth.

"If we don't make this change, more of their incomes will go to tax as their wages increase."

Finance Department slides last week show that with projected economic growth of 3pc or just under over the next five years, the next government will have around €600m in each Budget for tax cuts.

Fine Gael's tax package will also include a commitment to increase carbon tax by €6 each year, raising the current rate of €26 a tonne to €80 by 2030.

"This will raise an additional €6bn that will be invested in decarbonising the economy while also protecting the most vulnerable from the increases in living costs associated with the carbon tax," the briefing document says.

Meanwhile, Fianna Fail will promise some reductions in personal taxes in its manifesto next week, with income tax to be targeted.

However, the party's finance spokesman, Michael McGrath, said it would primarily focus on public spending and will go further than the 2:1 split in favour of spending over tax reductions that is in the Confidence and Supply deal with Fine Gael.

"I believe the emphasis will be further on investment and public services," Mr McGrath said.