A REPORT PUBLISHED today has recommended an increase in the income tax rate for the top 10 per cent of earners in Ireland, which could raise an additional €400 million, instead of further harsh cuts in the budget.
The report by the Nevin Economic Research Institute (NERI) said there are “mixed signals pointing towards stability, even tentative recovery, alongside concerns on export growth, domestic demand, continued long-term unemployment and declining GDP”.
It recommended that the fiscal adjustment should be €2 billion, rather than the proposed €3.1 billion package suggesting that the saving on the promissory note restructuring could be used to reduce the Budget’s scale.
The remaining adjustment should be achieved with taxation measures, according to NERI, with only cuts imposed being those already agreed and announced under the two public sector wage agreements.
An additional €400 million from households in the top 10 per cent of income distribution – those earning above €109,000 a year – could be raised with a 1.5 per cent increase in the income tax rate, the report found.
The report’s projections include depressed but positive GDP growth of one per cent this year, increasing marginally to 1.2 per cent in 2014 and a steady decrease in unemployment out to 2016 reaching 12.1 per cent.
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