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New middle income tax rate 'would give workers a bit of a break'

It comes after the ESRI forecast inflation could average 6.7%, and peak at around 8.5%
Jack Quann
Jack Quann

15.35 24 Mar 2022


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New middle income tax rate 'wo...

New middle income tax rate 'would give workers a bit of a break'

Jack Quann
Jack Quann

15.35 24 Mar 2022


Share this article


A new middle rate of income tax at 30% would give workers 'a bit of a break', according to Professor Stephen Kinsella.

The head of the Department of Economics at the University of Limerick was speaking as the Government is reportedly considering the move to ease cost-of-living pressures.

Prof Kinsella told Newstalk Breakfast this would not be hard to do.

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"There would be an act of the Oireachtas, they would introduce a new tax rate [and] the Revenue would start applying it.

"Instead of 33%, they would apply it at 30% and so forth.

"It would effectively be a lower tax than people are paying now.

"Those workers who do pay income tax would get a bit of a break - it would be a couple of hundred euros for someone earning 50,000 a year."

'Indexing tax bands'

He says the most recent ESRI forecast shows measures announced by Government, such as the energy credit, may not go far enough.

"What the ESRI has shown us yesterday is that inflation may get up to 8.5% this year, but next year - 2023 - it's going to be 5%.

"[That] means the exact situation we have now will pertain this time next year, or may pertain this time next year.

"What that means is people who are working, people who have a commute with childcare, with caring duties of other kinds they experience inflation very differently.

"What that means for us is we need to start thinking about things like indexing income tax bands to inflation - so that if inflation goes up by 5%, your income tax band goes up by 5%."

And he believes a 'mini-budget' may be justified as soon as next month.

"The last time we had one was in April 2009, and it made perfect sense because the assumptions that were underlying the previous budget turned out to be wrong.

"That exact situation applies now."

He adds: "They may not be calling it a mini-budget, but something very close it to may happen.

"And if it's going to happen, it'll happen in April because they've got to get a new finance bill through the Dáil, etc."

New middle income tax rate 'would give workers a bit of a break'

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Main image: Euro notes and coins are seen beside a tax form in May 2018. Picture by: Mirco Cordes / Alamy Stock Photo

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ESRI Forecast Income Tax Bands Income Tax Rate Inflation Middle Income Tax Newstalk Breakfast Stephen Kinsella University Of Limerick

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