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Ibec Calls For Irish Income Tax Cut

by Jason Gorringe, Tax-News.com, London

09 March 2015


Danny McCoy, the Chief Executive of business group Ibec, has warned that Ireland's high income tax rates "are out of line internationally and are a serious disincentive to work, taking promotion, or doing overtime."

Speaking at Ibec's CEO Conference, McCoy said that, "despite welcome moves to reduce the income tax burden in the last Budget, there is scope to do a lot more."

Finance Minister Michael Noonan's 2015 Budget, delivered in October 2014, included reforms to income tax rates and bands and the Universal Social Charge (USC), which reduced the marginal rate of tax from 52 percent to 51 percent for those with earnings below EUR70,000 (USD76,831).

As McCoy pointed out, Ireland still has one of the highest marginal tax rates among Organisation for Economic Cooperation and Development (OECD) countries, at 51 percent. He criticized the Government for retaining a higher marginal rate for those earning over EUR70,000, and warned that Ireland risks "losing our best and brightest to competing jurisdictions – countries with more sensible tax codes."

According to McCoy, a single worker earning EUR75,000 in Ireland takes home approximately EUR6,000 less than a similar worker in the UK.

"This is making it difficult for Irish businesses to attract and retain skilled workers. It also flies in the face of the shared aim of making Ireland a leading centre of design and innovation," he said.

McCoy called for the 2016 Budget to "prioritize further cuts to the marginal rate and adjust the band to give more money back to workers."

The Government has made clear that it intends to continue the tax reform program begun last October. The Ibec conference was also addressed by Prime Minister Enda Kenny, who said: "In the Budget, we reduced the USC and income tax on middle income workers earning less than EUR70,000. We will reduce it further in the next Budget, and in the following Budgets if re-elected."

Kenny added that "well designed tax cuts that reward hard work and enterprise, and help create jobs, generate the resources we need for better services and more investment." He pledged that, in 2015, the Government will "begin the process of equalizing the income tax treatment of the employed and the self-employed," and said that "the discriminatory tax treatment of self-employed people inherited by this Government can no longer be justified."

TAGS: Finance | Budgets | tax | investment | business | Ireland | budget | tax thresholds | tax rates | social security | tax reform | trade association | trade | individual income tax | services

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