Government may not prioritise tax breaks for middle-income earners in the budget, according to the latest Tax Strategy Group papers.

The group, made up of officials and advisors from different Government departments, publishes a series of papers in advance of every budget.

The first in this year’s series notes that the Government may "rule out" tax cut pledges for middle earners – even though many analysts suspected they might be in line for a tax break of €1,000 in Budget 2024.

Instead, the group suggests Finance Minister Michael McGrath may introduce tax credits to increase the wages of low-paid workers, alongside the increase in Carbon Tax and a hike social welfare payments.

Self-employed taxpayers may also see PRSI payments increase by 30%.

Inflation

On Newstalk Breakfast, Trinity College Dublin adjunct professor in finance Jim Stewart said that much of what has been proposed in the papers are decisions the Government may inevitably take.

"The context is that there's a huge Budget surplus now expected and the issue is what to do with this," he said.

Mr Stewart said there is a "clear need" for Government to focus on public expenditure in areas like housing and climate in Budget 2024, which it is likely to do.

"There are certain things that I thought were good – you need to increase PRSI rates because you need to support the social insurance system, particularly the pension system," he said.

"The big, big thing that's missing is really the effects of inflation. In real terms, people's PAYE tax rates are going up enormously.

"That has gone up because of the rising consumer and other prices, and this policy affects people in poverty."

"You do need Government expenditure, but you do need good Government expenditure."

'The squeezed middle'

Fine Gael TD Jennifer Carroll McNeill said Government is considering middle-income earners in Budget 2024.

"You hit the top rate of tax of €40,000 euros and we believe that that should be higher," she said.

"[For] families that were earning €41,000, €42,000, €43,000, it's far too soon to hit the top rate of tax.

"It is a straightforward political point to say that we believe that tax should be different that you shouldn't be hitting the top rate of tax at that stage."

Deputy Carroll McNeill has previously advocated for middle-income earners to get a €1,000 tax break in the budget and said she will continue to do so if it does not happen.

"We will continue to make the argument that people should pay less tax in an economy of this kind at full employment," she said.

Targeting groups

Mr Stewart said that Government may struggle to specifically target the most vulnerable members of society in Budget 2024.

"It is a very difficult issue to actually target those groups that are in need, and you don't have a lot of other people getting benefits and increases which they don't need," he said.

"Social welfare spending in Ireland is fairly efficient, particularly when you think about other countries.

"Nevertheless, I think the increase in inflation and housing are huge issues for lots of different people.

"How do you tackle that? I don't know what the answers are ... The Tax Strategy Group posed questions but not answers."

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