2026-06-25

6. Deputy Joe Neville asked the Tánaiste and Minister for Finance if his Department plans to review the current tax bands in the upcoming budget; and if he will make a statement on the matter. [48498/26]

My question also relates to tax measures. I am conscious that one third of people luckily do not pay tax. We have been supportive of the most vulnerable in our society as well. Does the Department plan to review the current tax bands in the upcoming budget?

I thank Deputy Neville for the question. The programme for Government contains commitments on personal income tax. We have been clear that if we saw a significant economic deterioration, we would not be able to proceed with personal income tax measures, but I am pleased to inform the House and the Deputy that we will be in a position this year to deliver a personal income tax package. It is more important, quite frankly, than it has been in a long time. The cost-of-living challenge cannot be dealt with solely through the social welfare system, though it is important. We have had good engagement with the people who we used to call the social partners and the people we meet through the Labour Employer Economic Forum, LEEF. There is widespread recognition that tax can play a helpful role in trying to assist people. We have made significant progress on income tax bands over the years. I think it was in 2015 that people paid the higher rate of tax at around €33,000. In most budgets over the course of the last Government, the threshold was increased and it is now €44,000. It is still below the OECD average. That is a slightly crude figure because when you take into account our PRSI system it changes it a bit, but our entry point to the higher rate of tax is still too low. We will decide as a Government the tax package in the round. The next step will be the publication of the summer economic statement next month. That will outline roughly how much we intend to spend on public services and public expenditure and how much of a tax package we intend to do. There will be a real focus on a personal income tax package. The argument about entry points and thresholds is compelling. I am not saying it is the only thing to look at doing but it is compelling. There are a lot of people who feel if they get a promotion, work a few extra hours or get a pay rise - there is wage growth in the economy - the taxman is taking too much of that money back off them, which is not fair.

I thank the Tánaiste very much for his reply. We all know that luckily the country is going really well economically and we are all benefiting. Wages are increasing with that and therefore more people are getting captured at earlier tax levels than they could and should be. That is why I brought up the bands specifically. I am obviously very conscious of the increases in costs for every household. We need to ensure the bands, given the increase in wages, do not function like a stealth tax that means more people get captured before they should, and indeed end up with less money than they began with. I am a chartered accountant who worked on payroll and discussed salaries with many people, so I know the challenges people face. In my capacity I had a meeting with the Central Bank this week and IFAC last week, which brought home to me the requirement for the tax changes we might need to put in place in the coming budget.

I thank Deputy Neville very much. To be helpful, we will see the tax strategy group papers published in the coming weeks and there will be the annual income tax paper from that group, which will set out information on the adjustment of income tax standard bands, including the estimated cost to the Exchequer. These publications are all based on the Revenue ready reckoner and are useful for all of us in this House to determine the different costs of different things. Based on Revenue's post-budget 2026 ready reckoner it was estimated that a €1,000 increase in the standard rate income tax band would cost about €230 million in the first year, so that gives an indication. Revenue will shortly publish its pre-budget 2027 ready reckoner. That, the tax strategy group papers and the summer economic statement will provide us all with an understanding of the space available for a tax package. We will then decide as a Government what the appropriate composition of that personal income tax package is and unveil it on 6 October.

I thank the Tánaiste for his reply. He gave extra detail about a €1,000 increase in the band costing €230 million. It gives us information about, to use a phrase that was used here previously, the fiscal space we have. That space is due to how the country has been well-managed economically by the Tánaiste, this Government and previous governments. I am also conscious of what someone who previously sat in the Tánaiste's seat said about supporting the people who get up early in the morning. That is something we really need to do too and increasing the bands would be of great benefit to those people. There are a lot of people who get up early, have their families and are busy. Obviously, people may be building a future for themselves outside their families. They are the people we really want to have the ability to support in the upcoming budget, through the Government's good governance. I look forward to that and to being in a position where we can do that.

I agree with Deputy Neville. Sometimes, we have debates in this House on taxation measures versus spending measures but it is not an either-or situation. We can help people through the income tax system and we should, for all the reasons the Deputy outlined, and will do that. There are also other issues the public want to see us make progress on with respect to the structural costs they face in their lives, whether it is the cost of the energy bill, childcare, access to disability services or the cost of education. This budget will need to be viewed in the round and the people and the Opposition will view it that way. We should be trying to look at both the tax side and the spending side and seeing together how we can put in place real measures that help. As the Deputy says, they get called different things by different parties in different electoral cycles. Whether it is the squeezed middle or the people who get up early in the morning we are all know who we are trying to help; hard-working people who are doing their best and want to get ahead, not just get by. They need us to use all the levers on the spending side and the tax side to try to make those structural changes to the cost base they face.