Pearse Doherty challenges the Tánaiste on plans for tax cuts ahead of Budget 2027, arguing workers were left worse off last year and any new package must be fair and reach low- and middle-income earners. Doherty presses for measures that prioritise USC relief and tax credits so those on under €44,000 benefit, while warning against repeated emergency budgets.
Key exchange: Doherty confronts the Minister Tánaiste about broken promises to workers and asks whether the Government will deliver a genuinely progressive personal income tax package. He notes the Programme for Government commitments, recent Budget measures and the forthcoming summary economic statement that will set parameters for the Budget.
Government record: The Tánaiste outlined steps already taken on income tax bands, credits and USC rates, and explained that distributional impact assessments and ESRI modelling will be used to test fairness. Doherty contrasted those measures with the experience of many workers who were left worse off and said past packages have been two-tier in effect.
Policy proposals: Doherty advocated a focus on the Universal Social Charge and tax credits rather than concentrating cuts in the higher-rate band, arguing that exempting income below €45,000 from USC would deliver relief across the workforce. He warned that raising the higher-rate threshold alone risks favouring those on higher pay while leaving lower earners behind.
Budget timing and politics: The exchange also touched on budget process and timing, with Doherty rejecting frequent calls for emergency budgets and urging a single, well-planned annual budget. He framed the debate as both a technical matter of distributional analysis and a political question about promises made to workers.
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Thank you. Minister Tánaiste, you've made it public that you plan to bring forward tax cuts in this year's budget after leaving workers off in last year's budget, and that's according to not just Sinn Féin but the SRI, but also you promised to bring the tax cuts forward in the election every single year and you broke that promise to workers and families out there. The fact that workers were left worse off last year is why it's even more important that any tax package for workers is fair and it works for all workers. Do you accept that we need a fair tax package and how do you see that being achieved? The Programme for Government Securing Ireland's Future contains specific undertakings with regard to personal income tax. It commits to implementing progressive changes in taxation if the economy remains strong, including indexing credits and bans to prevent an increase in the real burden of income tax, while in the event of an economic downturn or unexpected deterioration we'd postpone changes to income tax, credits or bans as we did in Budget 2021. To ease the burden facing average and middle income earners over successive budgets, the previous Government, which I was a member of, substantially increased the entry point to the higher rate of income tax for all earners by €8,700, or around 25%. The main credits have also increased by €350, or around 21%. In line with Government policy of ensuring full-time workers and the minimum wage remain outside the charge to the top rates of USC, the ceiling of the 2% USC rate band was increased by €6,898, or 34%, from 2020 to 2025. Budget 2024 and 2025 also cumulatively reduced the 4.5% rate of USC to 3%. As the Deputy will be aware, this country has a progressive income tax system. It's estimated that in 2026 approximately one-third of taxpayer units will be outside the income tax and USC net altogether, and therefore, due to the progressivity of our income tax system, account should be taken of this in any analysis or commentary. A number of targeted measures were introduced in the Budget last year—mortgage interest tax relief, rent-tax credit, the 9% VAT on gas and electricity bills as well. I published Ireland's medium-term plan last December with Minister Chambers, which sets out a binding path for net public spending for the lifetime of the Government. In the coming weeks, the summary economic statement will be published. This will outline the parameters for Budget 2027, including the size of the tax package. Following the summary economic statement, as part of the Budget process, my Department conducts distributional impact assessments to analyse the impact of Budget measures on Irish households. We will use ESRI's tax benefit micro-simulation switch to model proposed tax measures to ensure their fairness. It is our intention to have a personal income tax package in the Budget. We will outline the size of the tax measures in the summary economic statement and look forward to debating them on Budget. I would call for a two-tier tax package, which would mean that those on the higher end would benefit more than those on the lower end. We have about half the workforce that benefits far more than the other half. We have a situation where a worker on €50,000 gets a tax cut multiple times larger than a worker on €40,000. I understand the challenges in relation to adjusting tax bands and adjusting for inflation. It is not simple, but there are ways in which we can look at, for example, more focus on the USC and tax credits than simply dealing with the bands. That will make a far better impact for those on lower and middle incomes. Will you ensure that half of the workers who earn less than €44,000 or less get a fair tax package compared to somebody who is earning €50,000, €90,000 or, indeed, €300,000? The packages that you have brought forward have been unfair in the past, where half the workforce that earned below that level of €44,000 got far less than what I believe they should have got. I appreciate some of the Deputy's comments in terms of the challenges that exist here. We live in a country where a third of people pay no income tax for USC. When we're talking about progressivity, we have to acknowledge that fact. We can argue whether that's a good thing or a bad thing, but there's a third that don't pay anything in terms of income tax or USC. That has to be factored into any comments around progressivity. The second point I'd make is the entry point to the higher rate of tax in Ireland is still too low, in my view. It was €33,000 in 2015, it's now €44,000, still below the average. I look to my colleagues in the Labour Party, Deputy Nash, I've heard the comments of ICTAO in relation to this. It might suit you to say, it's the Congress of Trade Unions who are actually making the point that the entry point to the higher rate of tax is something that needs to be looked at too. It's IBEC that are making that point too. We need to make sure that with wage growth in the economy, and thank God we're seeing wages rise in the economy, we need to make sure that that wage growth doesn't get outstripped by the tax man taking all the benefit of it. The detail of the package is entirely a matter for the government to consider in the round. The government hasn't decided this, but I don't think we should dismiss, I'm not sure you are in fairness, but I don't think we should dismiss the threshold point either. Deputy? No, I'm not dismissing anything. What I'm saying is that you've consistently brought forward tax packages that are two-tier. For example, you talk about the entry point to the higher rate. If you focus on that over, for example, the USC or tax credits, that means there will be winners and losers here. The winners here are half the population that earn above €44,000 and the losers will be those that earn below €44,000. What is the better way? Because see when I'm talking to a constituent, a constituent that's earning €60,000 and would benefit from an increase in the entry point in terms of the band, they don't really care whether it's an entry point in the band, whether it's USC, whether it's tax credits. All they care about and all they know is that they're paying too much tax for what they're getting back. They want more money in their pocket at the end of the week. They want better services and all of that. So the fairest way to do that is to make sure that you do not actually spend a large portion of what is available in terms of tax reductions just on the workers above €44,000. USC is the best way to actually make sure that there is an impact for all people. We have said very clearly in our policy that all income below the first €45,000 of income should be exempt from USC. That can be started in the emergency budget. It should be followed up in the October budget. But these type of measures actually benefit all workers as opposed to a proposal that will benefit only some. Another Thursday, another emergency budget. We can't keep having calls for emergency budgets and mini-budgets every week in this place. We just can't. Come on. We just can't. Will you please read the analysis in the Fiscal Advisory Council, the Central Bank. Every week to look for another budget. I'm not looking for another budget. I'm looking for the one. You're doing it again, Piers. The budget's in around 100 days' time or thereabouts. We need to get into an annual budget cycle. We should have a good, decent, robust debate as to what the best composition of that is. I look forward to that very much. But this idea of an emergency budget, we have to stop. We have to stop. We have to run this country in a sustainable way. Now, I don't think we should look at how we assist people purely through the tax system, because you talk about lower-income people. You leave out in that analysis the social welfare system we have in place, the significant safety net that that provides, and the many supports that some lower-income families receive, including the working family payment and the largest increase we've received. But there's people today who are not wealthy people, who got up at a ridiculous hour in the morning, sat in horrific commuter traffic, and are looking for a bit of a break too. And they're annoyed, as are their trade union representatives, as are their employers, at the entry point to the higher rate of tax being too low in this country. So we haven't made any decisions in the round on this. But I don't think we should be getting into the divide and conquer. There's a legitimate policy debate around the rate at which you pay the higher rate of tax. Thank you. Deputy? Of course there's a legitimate policy debate. That's what we're having. Are you dismissing me? No, you're interrupting me. I'm sorry. I apologise. OK. That's the debate we're having. And the reality is that some people do win out more than others. That is also the reality. Let's not pretend that that doesn't exist. What I'm saying is the best way to actually deal with this is USC. So the people who earn €60,000, €70,000 also benefit, along with the people who earn €30,000 and €40,000. Because if you're just overly focused on the bands, and I'm not saying you dismiss doing anything with the bands, but every time you brought forward the type of package, it has been in that regard. And that's why we need a fair budget. I could stand here and remind you of your own campaigning. I campaign for an emergency, but not a different budget every day. I believe that people need a cost of living intervention right now. I don't believe they can wait till the 1st of January for tax adjustments to happen. That's a legitimate thing. And don't tell me what I can and cannot do. I represent people who are really pushed to the pin of the collar because of your decisions, because of your broken promises. Do you want me to remind you of them? That you would deliver a tax package every single year for workers? You broke that. Remember the time you paraded around with the placards, we will abolish the USC. Do you remember that one, Simon? You and the Finlay Gale. Remember the pictures of that there? Another broken promise. Look, I could list all of that out, but what I'm telling you now and what this question is about is delivering a fair tax package for workers to make sure you don't do the two-tier system that you've done previously, and to impress on you the USC and tax credits is the best way to deliver that fair package. So the good thing about this country is we have elections, and we had two very recently, and you went to Galway extensively. There were a lot, in fairness to you. You went to Galway and you said, send Finlay Gale a message. Send them a message. Back our emergency budget. Vote for the Sinn Féin candidate, and you lost the election badly, right? In Dublin Central, your leader's constituency, you lost the election badly, because people don't believe in this sort of divisive politics. They don't believe in it, Pierce, where you have only you represent hard-working people, and who the hell do you think the rest of us represent? Who do you think Jed and Cian and Catherine and Joe and I represent? We all get elected in this place, and we all represent people to the best of our ability, and your angry man routine and your dismissiveness of any of the bona fides of everybody else in this place is running a bit tiresome at this stage. We're all doing our best, and we will deliver a budget this year that will have a personal income tax package. We took a series of other decisions last year. People will debate the merits and demerits of them, and I'm happy to debate them too. This year, there will be a personal income tax package. There'll be other ways of also assisting people through the social welfare system, through the child poverty work, around the working family payment, through things like childcare as well. There's lots of steps that we can take together, but we haven't made any decisions, and I don't dismiss, by the way, the idea of tax credits or USC or thresholds. I'm just not accepting the idea that the threshold idea is a bad one, and I think you're open to considering that too. Thank you.
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