Government proposed tax cuts favour higher earners

Government proposed tax cuts favour higher earners Dr. Sean Healy, Social Justice Ireland. Photo: Eric Luke

A social justice think tank has urged tax proposals being considered by Government to be rejected as they would favour “only those with higher incomes”.

Social Justice Ireland (SJI) makes the warning ahead of Budget 2018. A study conducted by the think tank focused on three proposals, which they say will cost the State roughly the same amount (€196 million – €202 million) annually.

The proposals: An increase in the standard rate band of €1,000; a decrease of 0.5% in the 5% USC rate (which applies to incomes between €18,772 and €70,044); and an increase in the personal tax credit of €85 with equal increases in couple, widowed parents and single person child credit.

Director of SJI, Dr Seán Healy, said that increasing the standard rate band and decreasing USC would skew benefits towards those with higher incomes. However he said: “In contrast, increasing the personal tax credit spreads the benefits more evenly across all earners.”

Overall, SJI are against any tax reductions in Budget 2018, saying any money should be used to improve social services and infrastructure, increase the number of jobs and reduce poverty and exclusion.