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Income Tax

Raising threshold for higher tax rate to €50,000 'is achievable', says Varadkar

Varadkar says it’s not fair that average full-time workers are ‘it with the higher rate of income tax.

TAOISEACH LEO VARADKAR has said raising the highest rate of income tax to €50,000 is “achievable”. 

Fine Gael leader and soon-to-be Taoiseach Simon Harris said in his speech at the party’s Ard Fheis over the weekend that it is his ambition that nobody earning below €50,000 should pay the higher rate of income tax.

Yesterday, he clarified his remarks made yesterday evening, stating that the Government is making progress on reducing the income tax – but the change will not be introduced in the next budget. 

When asked about the idea, Varadkar told The Journal:

“I think getting to the point where people don’t have to pay the highest rate income tax until they earn €50,000 or above is achievable.”

Varadkar said he was unsure if Harris was suggesting that it will be done in the next budget, but added: “I think it’s a laudable ambition to try and get to 50.”

The idea to raise the threshold was raised by Varadkar when he addressed the National Economic Dialogue (NED) in Dublin last summer, though at the time, he also questioned whether it could be achieved in Budget 2024 or 2025.

In his address at the event in Dublin Castle, Varadkar said it is “simply not fair” that average full-time workers are “hit with the higher rate of income tax”.

“And it’s not fair that the tax system erodes any pay increase they do get, or overtime worked,” Varadkar added.

He said that this practice of taxation “isn’t the norm in competitor countries” that much of the younger generations are emigrating to.

Varakdar said: “In line with the Programme for Government, this budget should make substantial progress on lifting the point at which an individual pays the higher rate of income tax and it should also benefit all income tax payers to ensure fairness.

“This will increase take-home pay and will help with consumer confidence and demand. It should also help moderate demands on employers for bigger increases.”

Varadkar told The Journal over the weekend that much has been achieved so far by this government in terms of cutting income tax, stating that now the higher rate only kicks in at €42,000.

“I think the important thing is to make work pay. And, you know, somebody working full time on the average income now pays €4000 less on income tax and USC than they did 10 years ago. And that’s the difference with a Fine Gael government. If it was a left government, they would be paying €4,000 more.”