Pre-election budget wars escalate in bid for votes
Europe minister is signalling that major tax reforms are on the way
EUROPE Minister Jennifer Carroll MacNeill has signalled major tax reforms are on the cards as Fine Gael plan a pre-election budget giveaway to buy votes.
Minister Carroll MacNeill was one of three senior Fine Gael TDs who penned a joint op-ed calling for tax cuts, which sparked a public war of words with Fianna Fáil ahead of last year’s budget.
At the time, Tánaiste Micheál Martin accused the Fine Gael deputies of ‘undermining the budgetary process’.
Despite the furore, and Green leader Eamon Ryan’s recent criticism of budget promises made by his fellow Coalition leaders, Ms Carroll MacNeill unapologetically reiterated her call for significant tax cuts this weekend.
She told the Irish Mail on Sunday: ‘Our public finances are more sustainable and as we continue to look at more ways to generate income for the State to pay for public services by growing our industrial base, why shouldn’t people pay less tax and have more of their own earned income to spend the way they’d like?’
In what may come as a surprise to her Fianna Fáil and Green partners in Government, Ms Carroll MacNeill said there is now ‘a consensus’ across the coalition for meaningful tax cuts.
‘Last year [Junior Agriculture Minister] Martin [Heydon] and [Enterprise Minister] Peter [Burke] and I put the spotlight on the value of giving people more control over their income; it’s good now to see a consensus for this emerging.’
The Dun Laoghaire TD said near full employment levels also underline the need for tax reform. ‘We need to continue to look at personal tax rates in such a tight labour market, as being important in encouraging more people into the workforce,’ she said.
Ms Carroll MacNeill’s comment comes after Taoiseach Simon Harris recently announced plans to ‘reduce the burden of the USC on low and middle-income’ workers.
Fine Gael sources this weekend said the long-term aim is to abolish the €5.2bn levy, which was initially introduced as a ‘temporary’ tax in 2010 amid the fallout from the financial collapse – despite Minister for Public Expenditure Paschal Donohoe denying the measure was temporary in 2022.
Tánaiste Micheál Martin and Finance Minister Michael McGrath fired the opening shots of the pre-budget wars at the Fianna Fáil Ard Fhéis this month.
The Tánaiste announced €1.25bn worth of packages, including major increases in pensions and child benefit, while Minister McGrath put forward a hawkish €900m worth of personal tax cuts. Mr McGrath is believed to also be planning a series of USC cuts, but no details have been made public.
Back in Fine Gael, the Taoiseach restated his ‘ambition that nobody earning below €50,000 should pay the higher rate of income tax’, which would cost €1.7bn.
Both parties support retaining double-welfare payments (costing €700m) and €300m of energy credits. The proposed giveaways are against a backdrop of expected budgetary surpluses totalling €38bn in the next four years. These projections are in the Department of Finance’s latest Stability Programme Update (SPU) . However, the SPU also claimed: ‘The resources are not available to finance increased expenditure or reductions in taxes.’
‘Why shouldn’t people pay less tax?’