‘We need to slash income tax to stem health service exodus,’ warns Varadkar

SOCIAL Protection Minister Leo Varadkar has said measures to slash income tax in October’s Budget will help stave off an exodus of staff from the country’s health service.

Mr Varadkar became the latest Cabinet figure to call for a reduction in our “very high marginal rates of income tax” in order to keep our most talented workers at home. He told the Irish Independ

ent that workers needed to be rewarded in terms of tax reductions, particularly those who worked overtime or who had been promoted.

He also weighed in behind Public Expenditure Minister Paschal Donohoe, who this week signalled plans to slash the marginal rate in the Budget. At present, workers move on to the higher tax rate of 40pc when their earnings reach €33,800. But when the Universal Social Charge (USC) is factored in, workers in this category pay a marginal rate of 49.5pc.

“I think Paschal makes a strong argument for us to frame a new economic policy that recognises the recession is over and that we face new challenges, such as having to compete with post-Brexit Britain,” Mr Varadkar told the Irish Independent.

“That means policies like increasing spending on infrastructure – where we lag behind the rest of Europe – and also reducing the very high marginal rates of income tax in Ireland so that hard-working people are rewarded for working overtime and for getting that promotion. We want to keep our own talent in Ireland and encourage talent to come into Ireland,” he said.

Mr Varadkar, a former health minister, said measures needed to be introduced to prevent what he described as the “haemorrhaging” of health staff abroad.

“We’ve shown for decades how competitive tax rates attract business to Ireland. In the economy of the future, attracting human [resources] and retaining talent will be as important, and that’s not just the private sector, it’s important in area like the health service,” the Dublin West TD said.

The renewed focus on tax cuts comes as Mr Varadkar’s rival in the Fine Gael leadership battle, Simon Coveney, said he welcomed more hats in the ring.

“There is a lot of talent in Fine Gael. There is a lot of ambition within the party. There are a lot of people who think they have a lot to offer in terms of direction, leadership, energy and drive,” Mr Coveney said.

“The more ambition there is in the party, the better, as far as I am concerned. But that process hasn’t formally begun yet.”

Mr Coveney said he trusted the Taoiseach to ensure the success of the transition process both for the party and the Government.

He said Enda Kenny would clarify the situation on his return from the US, where he is attending the annual St Patrick’s Day events.