Middle-income earners will see a “significant impact” from the budget, Minister for Finance and Tánaiste Simon Harris has said.
His comments come after Minister for Public Expenditure Jack Chambers sought to manage expectations in recent days, saying that despite plans for an income tax reduction, the planned cut would be worth just a few hundred euros a year to taxpayers.
Speaking before the annual think-in held before the start of the parliamentary term, Harris said Chambers was “right to make the point” but suggested that many would see cumulative gains in excess of that figure.
“He may have used that phrase, a couple of hundred, I don’t think he used that in a literal sense, but I think he’s right to make the point.”
Harris continued: “I’m not going to give away the tax package here today but I believe we can make a significant impact cumulatively on the life of a middle income earner, and I think for many middle-income earners it will be more than that.
“I know the direction of travel – it’s to increase the bands, increase the credits. But I also want to have other conversations around costs more generally: childcare costs, energy costs,” he said.
He said Chambers was “doing a great job” and had his full support. “We are unified in the fact that there will be an income tax package.”
The Fine Gael leader said that “hundreds of euros in terms of assistance, in terms of your tax, does make a difference to families right across the country”.
He said that rather than temporary assistance, the electorate wanted clarity on things like energy costs, childcare, the social welfare system and tax. “When we look at this in the round, is the way to look at Budget ’27.”
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Asked about whether continuing geopolitical upheaval and the associated economic shocks would negate the impact of the budget measures, he warned that “there’s not a government in the entire world that can insulate its people from global economic shocks”.
“It’s also important that governments don’t chase inflation. Often governments around the world, trying to do their best by people, can actually end up making inflation worse.”
He said that if the Government didn’t take measures on tax, then middle-income earners would end up paying more tax next year. “They don’t have it within them to do that, they need to be given that space.”
Harris appeared to play down any movement in the budget on the Universal Social Charge, saying that neither his party nor its Coalition partners had campaigned on reductions, but rather on reductions in income tax which were contained in the Programme for Government.
“The direction of travel for this budget and I hope for the next four is in the space of credits and bands.”
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However, he hinted that there may be some reforms to capital gains tax (CGT), saying it was “objectively too high”. However, he cautioned that the tax package was €1.5 billion and that income tax would take up a significant amount of the money available.
“Looking at business taxes, looking at CGT, is something we’re doing at the moment. How far we can go in one budget will be a matter for the Government to consider as we finalise this budget.”
He said that a reformed CGT could in time bring in more revenue for the Government.
Asked about research from Coimisiún na Meán which found that most children wanted to be educated on the safe use of social media rather than be banned from platforms, he said the status quo online couldn’t continue.
“I’ve always said, how we get to that destination, we should listen to the best evidence,” he said.
He said social media companies had “less than zero interest” in reforming their platforms to make them safer, only moving when facing legal threats. He said there may be concrete proposals across the EU from the European Commission next week, when its president, Ursula von der Leyen, made her annual state of the union address.