Updated 1.12pm
RENUA HAS PROPOSED a radical plan to introduce a new flat rate tax of 23% on all income.
The proposal forms part of the party’s pre-budget submission, which has been published today and also includes a policy to abolish the TV licence and fund RTÉ entirely through commercial revenue.
Under the flat tax proposal the current income tax regime, USC, and employees’ PRSI would be abolished and a flat rate of 23% introduced.
Everybody, irrespective of income, would pay this rate with tax rebates to low income households on a sliding scale to avoid any drastic fall in their take home pay.
Speaking at the launch today, Renua leader Lucinda Creighton said:
Our flat tax policy will reward work, crucially, create more employment and take people out of the welfare and poverty trap and make it attractive for people to work here, including emigrants who want to come home. This will benefit all.
She said that anybody earning under €70,000 would receive a certain amount of income supports to avoid any fall in their income.
For the first three-years after the flat rate is introduced everybody on social welfare supports would retain their payments. Prior to this there would be a two-year lead in period focused on educating the public about the new system.
Those on middle and higher incomes would stand to benefit from this lower rate of tax with a significant knock-on effect on the exchequer’s tax take from this cohort.
Under the flat tax proposals a person earning €35,000 would benefit by €567 annually. A couple earning a combined income of €100,000 would be €15,856 better off.
Renua claims that the new system would still account for 80% of the exchequer’s current tax take with the abolition of tax shelters and reliefs making up the gap. Extra spending would also increase VAT receipts, the party said.
The party said that the proposal had not been costed by Department of Finance with Creighton describing many of their analyses as “inaccurate”.
It has been drawn-up by the party’s head of policy Ross McCarthy who said he consulted with a “wide range of economists, tax advisors and tax professionals” whom he declined to name on the grounds of confidentiality.
Elsewhere, Renua says it would abolish motor tax with a direct levy on fuel at source, adding 3 cent to the price of a litre of petrol and 4 cent to the price of a litre of diesel.
Other proposals include:
Former Libertas leader and businessman Declan Ganley has long been a proponent of the flat tax model and spoke extensively about it at the recent Renua think-in.
Similar flat tax regimes are in place in countries like Romania, Latvia and Lithuania.
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