Now Leo says he’ll cut capital gains rate too
Move follows ard fheis pledge to chop income tax
Rate increased in austerity years
LEO Varadkar appears to have added another tax promise to his list after saying he now wants to reduce capital gains tax.
However, the Taoiseach gave no comitment on when, or even if, he would do it.
He defended his weekend promise to gradually raise the entry rate for those in the higher income tax bracket to €50,000.
It would encourage parents to return to the workforce and make Ireland more attractive for foreign talent, he told the Future Jobs Summit in the Aviva Stadium yesterday.
Arguing for a capital gains tax reduction from its current rate of 33%, he said it was increased to raise revenue during the austerity years.
The tax is charged on the profit made from the sale of any asset such as land, houses or companies, although it is not applied to the family home. It was levied at a rate of 20% in 2008 before being repeatedly increased during the downturn to its current level.
On Saturday, Mr Varadkar told Fine Gael’s ard fheis that the party would raise the point at which people begin to pay the top rate of tax to €50,000 for a single person or €100,000 for a two-income couple. This would take place over five years if the party was still in government after the next election.
He defended the proposal yesterday, arguing the ‘fact that our higher rate of income tax in Ireland kicks in so soon, is a disincentive’.
He said: ‘It’s not just the unfairness of taking so much money out of people’s pockets, it’s also the fact that when we are competing for jobs with the United Kingdom – competing for talent and investment – we have put ourselves at a disadvantage by having a higher income tax rate that kicks in at below average incomes.
‘And it also affects us in terms of labour market participation. So many parents, mainly women, who could return to the workforce would do that obvious calculation that if their partner is using up all of their tax allow- ances, if they go back to work 52% of it is gone in tax and PRSI, and even if childcare costs nothing, 52% of it will still be gone in tax and PRSI.
The Taoiseach also said the Government will try to equalise tax credits for entrepreneurs and the self-employed but he wants to ensure large firms pay their fair share of corporation tax. He added: ‘We also need to be on the right side of history, I think, when it comes to corporation profit tax, and there is no way that we are ever going to change our 12.5% corporation profit tax rate.’
He added: ‘But we do need to acknowledge that business has changed and technologies have changed.
‘And there will be international tax changes coming down the line and we need to make sure that we are on the right side of history and we get ahead of those because big companies that make large profits should pay their fair share of tax, and some of them aren’t doing that at the moment.’