CORI urges Cowen not to widen tax bands

The Government has been urged not to widen tax bands in the next Budget because it would not help the lowest wage earners in …

The Government has been urged not to widen tax bands in the next Budget because it would not help the lowest wage earners in the economy.

Father Seán Healy of the Conference of the Religious In Ireland's (CORI) justice commission said the Minister for Finance, Mr Cowen, should instead focus on increasing tax credits, which he said would be a much fairer way of spreading tax benefits.

Father Healy said that widening the 20 per cent tax band "provides no benefit whatsoever to people earning less than €28,000 a year".

According to Father Healy it would cost €700 million to increase the 20 per cent tax band by €5,500 to €33,500, which would result in a net benefit of €1,210 a year to a single person earning more than €28,000.

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Speaking at CORI's annual social policy conference, he said the same money should instead be used to increase tax credits by €512, which would benefit all tax payers, including those on low wages.

"It would be a net benefit of €10 a week for everybody," said Father Healy.

Such a move would address the problem of the "working poor".

The working poor are defined as people in part or full-time employment at risk of poverty.

Single households with an income of less than €182 or households with two adults with incomes of less than €412 a week are identified as being at risk of poverty.

It is now estimated that over 700,000 adults and children in Ireland live in such households and nearly one quarter of them are headed by working people.

According to a paper by Father Healy and Sister Brigid Reynolds, along with increasing tax credits the Government should also make them refundable for low- wage earners who do not use up all of their credits.

"Both of these would have a direct positive impact on reducing the numbers of people in the working poor category," said the authors.

They also urged the Government to increase the level of the total tax take, which they said was "essential in the medium term if there is to be sufficient income to tackle both the infrastructure and social provision deficits currently being experienced and if Ireland is to meet its various commitments".