The income tax package in Budget 2027 could be higher than the mooted €1.5 billion if extra revenues come in from other sources, Minister for Finance Simon Harris has said.
Harris also indicated that the Cabinet may look at the intended increase for the carbon tax of €7.50 per tonne of carbon dioxide in October in light of the ongoing spike in world energy prices.
He was speaking before the first full Cabinet meeting after the summer break, at which initial discussions on the October 6th budget took place.
Harris said he was determined that if people received overtime pay or a promotion that they would not be penalised by being put into a higher tax bracket. He also signalled scope for a potentially bigger package.
“I have a tax package of about €1.5 billion. And whatever proposals we bring forward as a Government will need to fit within that envelope. Indeed, if the Government decides to do anything that raises revenue, for example, a bank levy, for example, or any decisions the Government may make on cigarettes or the like, that [revenue] can obviously be put towards tax measures as well. We haven’t settled on the figure yet.”
Harris said that the programme for government has committed to indexation. “Increasing bands and increasing credits is a good and sensible thing to do. It doesn’t narrow the tax base, but what it does recognise is that if people get a wage increase, or work a few hours overtime, or if they get a promotion, it’s unfair that they move at that earlier stage into the higher band.”
An increase in carbon tax was scheduled for the summer but was deferred because of spiralling energy prices until October 14th. Asked if he would further defer it, Harris replied that he is a strong proponent of the carbon tax but the trajectory for increases was set before the Ukraine and Middle East wars.
Taoiseach Micheál Martin said the carbon tax would be considered but was more circumspect. He noted that revenue from the tax was “baked” into the National Development Plan for climate change measures, as well as to alleviate fuel poverty and to pay farmers for adopting environmentally friendly practices.
Martin also said the end of the Unifil [UN Interim Force in Lebanon] mission in Lebanon at Christmas, after almost 50 years of peacekeeping in the region, was “a big concern” for the Defence Forces.
He said that some European Union countries were trying to assemble a new force on the basis that if there was a complete withdrawal of troops, “it would lead to a deterioration of the situation from a humanitarian point of view”.