Donohoe vows not to raise tax in Budget... but says expect no cuts either
FINANCE Minister Paschal Donohoe has promised that there will be no new taxes or tax increases under the current administration.
Having previously promised not to put up personal t axes in t his month’s Budget, Mr Donohoe has now gone f urther and given what he called, ‘a number of specific undertakings with regard to personal taxation’.
He said there will be no increases in income tax or USC rates in Budget 2021 and there will be no change to income tax credits or bands.
And he added: ‘From Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be indexed linked to earnings.’
This ‘will be done to prevent an increase in the real burden of income tax, to prevent more l ow- i ncome workers being taken into the tax net because
‘Focused on reductions’
of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates’.
He also claimed he has a history of being a tax- cutting minister and said that from 2015 to 2019 his ‘five successive budgets f ocused on reductions to i ncome tax targeted at low to middleincome earners’.
He said that, under Fine Gael-led governments, ‘lower rates of Universal Social Charge were reduced from 2%, 4% and 7% t o 0.5%, 2% and 4.5%; the income tax s t andard- r ate band was i ncreased by € 2,500 f rom €32,800 to €35,300 for single individuals and from €41,800 to €44,300 for married oneearner couples and the higher rate of income tax was reduced from 41% to 40%.’
A senior Fine Gael source noted: ‘It is a little difficult to see Paschal being the Fine Gael version of Charlie
McCreevy. Fo r all his virtues, Paschal is more of an “if I have any spare cash, I will put it in the piggy bank” sort of fellow.’
The source was referring to the tax-cutting Mr McCreevy’s infamous ‘if I have it, I spend it’ economic philosophy, which many believe precipitated the collapse of the Celtic Tiger.
The source added: ‘I suspect a l eadership contest is coming up if he is becoming t hat generous with t he nation’s finances.’
The generally cautious Mr Donohoe did add one caveat to his tax proposals, warning that when i t came to tax cuts, ‘the extent to which it may be possible to make progress in this regard will depend on prevailing economic circumstances’.
He added: ‘ During t he current crisis, the Government’s priority is to ensure t hat assistance i s given to employees and businesses in a sustainable and affordable manner.’