Tánaiste Joan Burton has said people in Ireland enter the top rate of tax earlier than most of their counterparts in the rest of Europe.
She signalled that addressing this issue could be important if the country was to attract back emigrants who had left over recent years.
She told the Government’s national economic dialogue in Dublin Castle that the Irish economy was set to grow by about 4 per cent this year. She said it was perfectly placed to grow at a steady pace in the years ahead.
However she said that in addition to an economic recovery, there had to be asocial recovery as well that would raises people’s living standards.
“We will continue to reduce taxes for low and middle-income workers, to ensure they take home more pay.
“We will continue to increase child benefit and make a number of additional targeted welfare increases. We will continue to prioritise investment in infrastructure that will boost our long-term economic - and social - capacity.”
Separately, Minister of State at the Department of Finance Simon Harris said he “cannot understand the logic of people not seeing that personal taxation levels have to be reduced”.
He said that having engaged with a group of young emigrants in London, they told him they unanimously wanted to return to Ireland but that issues of “personal taxation and housing” were standing in their way.
“They want to see personal taxation come down,” he said. “ They now know they can get a job but they want to see personal taxes down.
“I cannot understand the logic of people not seeing that personal taxation levels have to be reduced.”
“We tend to spend a lot of time in politics talking about people on the margins, people in financial difficulty - and rightly so - but what about the many people who are just about struggling to get by, who are finding that the seven per cent universal social charge rate kicking in at the early point it does, is penal.”
He added there was a “productivity issue” at stake.
“If you talk to workers on the factory floors or people in offices who are afraid to work the hours of overtime because it takes them into a higher rate of tax,” he said. “The penal rate of seven per cent USC, the point it kicks in at, and the impact it’s having on productivity needs to be looked at.”
