AS A RESULT of October’s budget, everyone who pays tax or the Universal Social Charge will be better off from January. That is a fact. It is therefore disappointing that the opposition are trying to undermine the benefits of a budget which is finally giving something back to every worker in the country.
There is a clear agenda in the opposition ranks to misrepresent Fine Gael as the party that looks after the high earners in society. However this does not stand up to the most basic scrutiny. That’s because it is politically motivated and untrue.
Regarding the recent ESRI report on Budget 2015, the SWITCH model of analysis used by the ESRI excluded a number of important budget measures, such as the back-to-work family dividend, the housing assistance payment and the effective abolition of the pension levy.
Over 410,000 of the lowest earning people no longer pay any tax on their income as a direct result of budgets introduced by the government and you cannot benefit from tax cuts if don’t pay any tax.
I would ask people to judge us not on lazy perceptions proffered by the opposition but on the merits of our economic policy. I certainly never start out my day in the Department of Finance thinking how can I be unfair today, quite the opposite.
The recent budget is underscored the commitment of this government to reduce tax on low earners and the squeezed middle. Every single measure of this progressive Budget has been underscored by the need for fairness, job creation and economic growth.
The second or higher rate of tax is not a tax paid only by high earners as Fianna Fáil and Sinn Fein would have you believe. It is a tax on middle Ireland, middle income earners, people working in our public services and in our SMEs, in factories and our offices – not wealthy people, normal, hardworking people. In fact, the higher tax rate effects people earning less than the average annual wage.
If you currently earn more than €32,800 you pay the higher rate of tax, even though you earn €3,000 less than the average annual wage. From January, the higher rate will begin at €33,800. And we intend in future budgets to continue to push this rate upwards so that average earners aren’t paying the higher rate of tax.
Any analysis of the budget will disabuse people of the notion that it favours the well off. The Budget reduced the higher rate of tax by 1 per cent but capped the benefits of that cut on earnings over €70,000 by the introduction of an extra rate of USC. How does that favour higher earners?
If you use the tax calculator on the Fine Gael website you will see that if you type in €70,100 you will benefit from the recent budget to the tune of €747. And if you type in any figure over €70,100 the tax back figure will remain exactly the same. The benefit does not increase the more income you earn because we have capped it.
More than 80,000 of the lowest paid workers in the State will no longer pay USC from January as a result of the Budget. This brings to 410,000 the number of people we have removed from this tax. The rate of USC on people paying the standard rate of tax has also been significantly reduced.
The most progressive way to ensure everybody feels the benefit of a strong economy is to create employment and make work pay. The restoration of the minimum wage from €7.65 to €8.65 was one of the first acts of this government and was done in an effort to fairly reward people for their work. And the government has initiated a Low Pay Commission which will take place next year.
I am keen to debunk this myth that Fine Gael stands for the wealthy because it flies in the face of what we are actually working to achieve. Come January, this will be made apparent to low and middle income taxpayers because they will have more money in their pockets.
What Fine Gael does stand for is responsible economic policies. Fine Gael led governments have traditionally been lumped with having to clean up cleaning up after Fianna Fáil has made a mess of the economy. Fianna Fáil’s response is usually to criticise us for not putting out the fire that they started quickly enough.
Fixing an economy which has been run for short term electoral gain is not always popular but we are motivated by creating a strong and sustainable economy. And hopefully that will convince people of the merits of re-electing us.
Fine Gael has always been seen as the pro-enterprise party, that’s because we understand intrinsically that a healthy, sustainable economy depends on people starting businesses and creating jobs. There are over 800,000 self-employed people in the State. They are the bedrock of our economy and they create a massive amount of jobs, the taxes from which fund our schools, roads and hospitals.
Remember, for every person who moves from unemployment into full time work, the State has €20,000 more to spend on other services. Suffice to say, the creation of more than 80,000 jobs under this government since 2012 has been instrumental in turning our economy around. There are still too many people who lost their jobs after the boom who are still out of work but I believe that we are approaching the economic momentum needed to help get many thousands more back to work.
A strong economy is not the end goal because a strong economy must serve a strong society. In a well-functioning society a person can support themselves and their family because they have a stable job that rewards them for their efforts. This society cares for and provides a good quality of life to those who cannot work. This is the society that Fine Gael and this government are working towards.
Simon Harris is a Fine Gael TD for Wicklow and Minister of State at the Departments of Finance, Public Expenditure and Reform and Taoiseach, with special responsibility for the Office of Public Works, Public Procurement, and International Banking (including the IFSC)
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