Varadkar in €3k tax cut grab for power
Donohoe: ‘Tax cuts needed post Brexit’ Claims 900,000 workers set to benefit
A TAX cut worth €3,000 to the average worker will form the centrepiece of Taoiseach Leo Varadkar’s re-election plans.
Fine Gael has made the first pitch ahead of a likely election next year with a promise that will cost €2.9bn.
But Finance Minister Paschal Donohoe insisted to the
Sunday Independent that Ireland will struggle to remain competitive in a post-Brexit era without major reductions in income tax.
He said the “acceleration of where we have been over the last two budgets” would help more than 900,000 workers.
“It’s something that would have to take place across the remainder of this Dail and the entirety of the next Dail.”
The commitment came as a string of Fine Gael heavy-hitters ramped up the pressure on Fianna Fail to extend the minority government’s lifespan until June 2020.
Talks between the two parties on the confidence and supply arrangement are now entering their fourth week — but have not yet moved passed the ‘review’ stage.
Tanaiste Simon Coveney said the process could not continue “forever”, adding: “We’re ready [for an election]. Make no mistake about that.”
Communications Minister Richard Bruton confirmed the photographs for posters had been taken, while Justice Minister Charlie Flanagan boasted that the printers were “very well oiled”.
And Health Minister Simon Harris said Fianna Fail leader Micheal Martin needed to call a halt to this “period of navel gazing” as the existing deal “ends in a matter of days”.
Privately ministers were even more blunt in their assessment of the situation, with a number noting that once clarity was achieved on the Brexit deal then all bets would be off.
“We can’t wait around much longer for Fianna Fail to make their minds up,” said one Cabinet minister.
However, Fine Gael has left itself wide open to accusations of using Fianna Fail’s Celtic Tiger playbook by promising huge tax cuts ahead of an election.
In his second ard fheis speech as leader, Leo Varadkar said that over the next five budgets he plans to increase the point at which people pay the top rate of income tax to €50,000 for a single person or €100,000 for a two-income couple. As a result of decisions made in Budget 2019, the 40pc rate of income tax will kick in at €35,300 next year.
Mr Varadkar said this rate “discourages parents from returning to the workforce, discourages people who emigrated from coming home, and makes it harder to attract good jobs and talent to Ireland”.
“It is holding our country back,” he added.
The Taoiseach denied this was an attempt to buy votes, claiming it was opposition parties like Fianna Fail and Sinn Fein who were “promising everything to everyone and they are promising to do it all now”.
Fianna Fail leader Micheal Martin hit back at the Taoiseach’s tax cut pledge, urging Fine Gael to “cool the jets” on electioneering tax promises.
“Remember the last general election: ‘US style taxes and we’ ll abolish the Universal Social Charge’?” he said.
“That was a €4bn promise abandoned as soon as they got into government.”
Speaking to the Sunday Independent, Mr Donohoe said the economy was well positioned to afford the plan because taxes in this country are not directly linked to wage inflation.
“We’ll stagger it over many different budgets,” he said, adding that the non-indexation of tax should free up “approximately a minimum of €500m across the coming years and we know this is a change that will cost less than that.
“It’s a continuation of what I’ve been doing in recent budgets. I’ve made it clear that my priority is to make changes to the standard cut-off rate.
“And I’m making the point that if Fine Gael had the opportunity to stay in office for a further budget and across the remainder of the next Dail, this is what I would be looking to do,” Mr Donohoe said.
Part of the minister’s logic for the tax cuts is plans by the UK government to reduce the tax burden on workers there.
“As we see moves begin elsewhere to move the standard cut-off rate upwards in other economies which will be even more having an effect here. We need to make sure we are competitive against that,” he said.
Mr Varadkar told reporters in Citywest that he will not be calling a general election before the end of the year.
In reference to the ongoing uncertainty over Brexit, he said: “My primary interest is not going to be electoral interest at the moment. It’s looking after the interest of the country we’re charged to lead.”
However, he said that while the minority government has achieved more than he envisaged since 2016, the ‘new politics’ arrangement has also led to some legislation being delayed. “The country is very much on track. It is my view that a majority government led by Fine Gael would be able to get a lot more done.”
He used his televised speech to excoriate the Opposition, arguing their policies “will put Ireland back on the road to recession and austerity”.
He added: “Do not believe their promises — pay increases or welfare increases or tax breaks or public spending paid for with borrowed money today turn into pay cuts, welfare cuts and tax increases tomorrow. We are the party that will take Ireland forward to long-term prosperity, away from the boom and bust economics of the past.”
FINE Gael has ramped up the pressure on Micheal Martin to extend the lifespan of the Government by 18 months — or let the country decide who should govern.
A string of ministers launched public and private attacks on Fianna Fail this weekend amid growing impatience over the slow pace of confidence-and-supply talks.
As negotiations enter a fourth week, they have yet to deal with what a new arrangement might involve. The focus has been on reviewing the past three years with officials from the Departments of Housing and Health.
Taoiseach Leo Varadkar said yesterday he will not be calling a general election before the end of the year. However, there were strong hints from his Cabinet that, once the abortion legislation has passed and Brexit uncertainty is resolved, all bets are off.
Tanaiste Simon Coveney, who is usually coy on such issues, declared the party was election-ready. “Make no mistake about that,” he said.
Mr Coveney said the negotiations are “serious in terms of trying to provide stability for a relatively short period of time” but added that Fine Gael “will not stay in government without clarity” on the deal with Fianna Fail.
Justice Minister Charlie Flanagan said the message from the Ard Fheis “is that Fine Gael is ready for that election. The printing machines are well-oiled”.
Asked if the rhetoric coming from Fine Gael risked bouncing the country into an unintended election, Simon Harris said: “No, but what could do that is if people don’t recognise we have a confidence-and-supply agreement that expires in a matter of days. For some time now, Michael Martin has been debating with himself about when confidence and supply ends.”
The minister criticised Fianna Fail’s Lisa Chambers for “sniping” at the Government’s messaging on Brexit. He said other EU countries were showing more solidarity with Ireland than Fianna Fail.
Mr Varadkar said Fine Gael is “almost” election ready. He expressed a preference to secure an extension to the current Government’s lifespan until summer 2020, but warned that if Fianna Fail’s price is too high, he will go to the country in the New Year.
“Any political party has to be ready for an election. We have a minority Government and a confidence-and-supply agreement that was for three budgets. Now, we’re beyond three budgets. We’re fairly ready but not 100pc,” Mr Varadkar said.
He was speaking at Fine Gael’s Ard Fheis in Dublin where members are debating what the party’s key policies should be for the year ahead.
Mr Varadkar said it was not in his plan to have an election this year but “these things aren’t entirely under my control”.
“I don’t have any plans to seek a dissolution of the Dail this side of Christmas. But it’s not entirely in my hands. Fianna Fail could withdraw support at any time or potentially, although I don’t anticipate it, people who are serving in Government now could leave it,” he said.
On uncertainty over Brexit, he said: “My primary interest is not going to be electoral interest. It’s looking after the interest of the country we’re charged to lead.”
However, he said that while the minority Government has achieved more than he envisaged since 2016, the ‘new politics’ has also lead to some legislation being delayed. “The country is on track. It is my view a majority Government led by Fine Gael would be able to get a lot more done.”