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There will be no increases in income tax for the next five years, Taoiseach Micheál Martin has promised.
Despite the rising cost of the pandemic and the estimated budget deficit of 25 billion euros, the Taoiseach said it will “honor the commitment” not to increase income taxes for the life of the Coalition.
“Income tax, we have said, we are not going to increase,” he said.
However, Mr. Martin pointed out some changes to the PRSI system to fund more welfare benefits for workers, such as pensions or severance pay.
Martin said he is confident that people will turn to the household savings they have accumulated during the closing months to help the economy recover after the Covid-19 crisis.
The leader of Fianna Fáil said that the Government Program contains a commitment not to increase income taxes for the next five years.
“That being said, we will borrow around 40 billion euros between 2020 and 2021. This year’s deficit is about 6.5% … the target is 5.7% next year,” he added.
Mr. Martin said the government has been able to obtain very low-cost loans during the pandemic, adding that the focus after the Covid-19 crisis will be to reduce that debt.
“We have received different analyzes in terms of what would ideally happen in a post-Covid environment,” the Taoiseach said.
“It has approximately € 12.5 billion in additional household savings this year than it would have had last year and that is quite significant.
“That could be released into the economy over time when people become less cautious and worry about the impact of Covid on their personal lives.”
However, Mr. Martin cautioned that there could be “areas of income generation that cannot be ruled out.”
The Taoiseach said that the newly established Pension Commission may recommend changes to the PRSI system to finance pensions.
“That would be more specific to the social security fund or to the improvements I mentioned earlier: the living wage or even better layoff mechanisms, for example, for workers who are in difficulty,” he said.
“Therefore, you could also be considering a reorganization of some of your social supports, which may require some income-generating measures that would be exclusive or applicable to that area. But all that will be resolved in terms of recommendations that will come from the pension commission. “
The Government Program says that tax credits and bands will be indexed tied to earnings from the 2022 Budget onward if revenues rise again as the economy recovers.
Your goal will be to ensure that fewer low-income people enter the tax network and ensure that more people don’t pay higher income taxes and USC rates.
There were no significant income tax cuts in the latest budget due to the cost of responding to the coronavirus pandemic.
During the coalition negotiations, Fine Gael lobbied to ensure that there was a commitment in the Government Program not to increase taxes for workers for the next five years.
The government has plans to introduce a new self-enrollment pension system in which the state will match contributions made by workers to their individual pension fund.
A Pension Commission is currently examining a number of issues, including the age at which state pension is paid to people who have stopped working,
The retirement age became a general election issue after Sinn Féin, the Labor Party, the Green Party and the far left campaigned against a
Government commitment to raise the retirement age to 67 this year.
Fianna Fáil initially favored raising the age, but took a 180-degree turn during the campaign to say that the party would either avoid the increase or offer a similar payment to those waiting for full pension. Fine Gael is in favor of the increase.
The issue was a stumbling block during the Government Program negotiations between Fianna Fáíl, Fine Gael and the Green Party.
The three parties finally agreed to delay the increase and allow the Pensions Commission to make recommendations later this year.
Irish independent
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