‘Robbing Paschal to pay Paschal’ makes little sense

FAIRNESS, the Taoiseach told the nation, is what drives his party’s approach to the country’s finances. “Fairness to citizens who pay their taxes. Fairness to those who get up early in the morning – or late at night – and make this country work,” he said. At the Fine Gael Ard Fheis at the weekend, Leo Varadkar pledged to give middle-income earners on up to €50,000 a year an extra €3,000 in their pockets through tax cuts.

It won’t happen today or tomorrow, but over the course of the next five budgets, Mr Varadkar pledged to increase the point at which people pay the top rate of tax to €50,000 for a single person or €100,000 for a two-income couple.

“We will end this unfairness and allow hard-working people keep more of the money they earn. They deserve it,” he said.

Although it has all the hallmarks of a pre-election promise from the Celtic Tiger era, it’s hard to argue with the sentiment that workers in this country do pay too much tax.

So how does this tally with the policy of quietly removing tax reliefs from low and middle-income workers?

With little fanfare from Government, the Revenue Commissioners is hitting the incomes of tens of thousands of workers who avail of the flat-rate expenses relief.

The flat-rate scheme is meant to cover the cost of workers who have to pay for uniforms and tools. It reduces the portion of a worker’s income they have to pay tax on.

The exact reduction depends on a person’s profession – but more than 500,000 PAYE workers currently avail of it.

Ending the allowance will likely wipe out any gains from the recent Budget, where workers on low-to-middle incomes benefited to the tune of about €200 to €250 a year.

Mr Varadkar and Finance Minister Paschal Donohoe’s promises of future largesse are well and good, but it’s the here and now that matters to most. And here and now, Mr Donohoe is giving with one hand while taking away with the other.

Unlike the millionaire classes, PAYE workers don’t have the opportunity to dramatically write down their tax bills through the use of lucrative and complicated reliefs.

These are the people who get up early in the morning who Mr Varadkar professes to represent.

The removal of the tax reliefs is coming without warning. At the very least, Mr Donohoe could have the common courtesy to explain these changes and the rationale behind them to workers.

And let’s not pass the parcel to the Revenue Commissioners. Mr Donohoe and Mr Varadkar are happy to take the plaudits of tax cuts, so must take responsibility for this tax grab.

Let’s not pass the parcel of blame to the Revenue Commissioners for this tax grab