Fine Gael three stick to their guns over demand for Budget tax cuts
Ministers stand by their controversial call
THREE Fine Gael junior ministers who provoked a political furore earlier this year over demands for substantial tax cuts have reiterated their proposal.
In an unprecedented move last May, Jennifer Carroll MacNeill, Martin Heydon and Peter Burke wrote an op-ed in a national newspaper calling for tax cuts worth €1,000 for the average taxpayer.
Afterwards, Tánaiste Micheál Martin said the ministers – who are seen by many in Fine Gael as representing the party’s next generation of high-ranking Cabinet members – had undermined the budgetary process.
Responding to queries from the Mail on Sunday, the three junior ministers this week said they still expected to see substantial tax reductions, despite growing pressures on the exchequer.
Ms Carroll MacNeill, Minister of State in Finance, said: ‘Fine Gael has progressively reduced the tax burden for middle-income workers since 2014 and wants to continue the progress of last year’s budget, which targeted middleincome workers through tax band changes.
‘Keeping people from reaching the top rate of tax is an important part of that. We want to continue to put money back in people’s pockets through tax reductions.’
Peter Burke, Minister of State for European Affairs and Defence, who serves in the Taoiseach’s office, also reiterated his belief that tax cuts should be given in the Budget on October 10.
He said: ‘I am of the firm belief that the more we support working families through the tax code, the more we can grow our economy, as evidenced by the last number of budgets. It is critical to keep on this trajectory, especially when many face the loss of pay rises and overtime through taxation.
‘I understand the mechanics of a three-party coalition, but I am of the belief on continuing to give middle-income earners more of their own money back and that is always a core principle of Fine Gael,’ Mr Burke added.
Martin Heydon, Minister of State for Agriculture, also weighed in behind tax cuts when questioned by the MoS this weekend. ‘Successive Fine
Gael-led governments have continuously reduced the tax burden for middle-income workers since 2014,’ he said.
‘It is more important than ever in a time of inflation and high cost of living that we continue to support middle-income earners from reaching the top rate of tax.
‘We want to continue to put more of workers’ hard-earned money back in their pockets through tax reductions in the upcoming Budget,’ he added.
The reiteration of the three ministers’ position comes against a backdrop of increased tensions between Fianna Fáil and Fine Gael
over Housing Minister Darragh O’Brien’s request for tax relief for landlords, and the impact of that on Fine Gael’s plans for attention-grabbing tax cuts.
In a late intervention, the Housing Minister has called for more tax reliefs for landlords to help shore up the private rental sector. But given that any monies for this will have to come from the budgetary allocation for taxcutting measures, this is likely to affect the capacity of the exchequer to cut personal taxes.
The Coalition’s ability to deliver significant tax cuts is also likely to be influenced by a rise in petrol and diesel prices.
Excise duty on petrol and diesel was supposed to go up by 9c and 6c respectively at the end of the month, but political unease is growing within the Coalition over being seen to preside over the return of €2-plus prices for motor fuels.
One Fine Gael minister noted of the O’Brien move: ‘It is late, and it will be costly.
‘Tax credits for renters have a light hand. By contrast, anything to do with landlords simply soaks money up.’
The Taoiseach, however, has also sent a strong signal to his party that the extent of tax cuts will be affected by Mr O’Brien’s proposals and the rising cost of fuel. The Taoiseach has already silently dropped his original proposal for a new 30% tax rate in the wake of a hostile response from Fianna Fáil and unease within the Department of Finance over the complexities of implementing such a scheme.
However Fine Gael has been a strong advocate of a €4,000 increase in the current €40,000 cut-off point at which workers begin to pay the higher, 40% rate of income tax.
It is estimated that a 10% [€4,000] increase in the standard rate tax threshold would cost up to €1bn.
One Fine Gael source said Mr Varadkar privately informed his party last week that there will be some sort of tax relief, but any tax relief measures for landlords
‘Put money back in people’s pockets’
‘It is late and it will be costly’
‘Part of the €1.2bn taxation package’
would eat into that.
As petrol and diesel nudge towards the €2 mark again, Mr Varadkar also warned that any decisions on excise duty will come from the same allocation as the €1.2bn for tax cuts.
One TD noted: ‘He was very clear. If we are to do a deal with Fianna Fáil on landlords – and we are moving towards that – it will affect tax cuts.
‘There is €1.2bn or €1.3bn available – forget the Finance claim that it is €1.15bn, there will be more. But if Darragh O’Brien starts gobbling up a couple of hundred million, things will get tight very quickly,’ they added.
Responding to queries from the MoS, the Department of Finance confirmed that any relief for landlords ‘is a taxation measure. Any change would be part of the €1.2bn taxation package’.