Numbers don't add up - Fianna Fail claims far fewer to benefit from Fine Gael's €1,000 Budget tax cut

Fine Gael claims nearly two million taxpayers would benefit from tax-cut plan

Minister for Finance Michael McGrath (PA/Damien Storan)

Hugh O’Connell and Gabija Gataveckaite

Fianna Fáil has cast major doubt on Fine Gael’s claims that nearly two million taxpayers would benefit from its controversial €1,000 tax-cut plan which has sparked a bitter row in the Coalition.

Finance Minister Michael McGrath is facing calls from Fine Gael to include large tax cuts in October’s Budget that, it is claimed, would make the average worker €1,000-a-year better off.

It comes as the Coalition comes under mounting pressure from within to increase the weekly state pension by at least €15 with an unprecedented pre-summer flurry of Budget kite-flying and speculation now under way.

After days of bitter exchanges, Fianna Fáil now claims that far fewer taxpayers than Fine Gael claims would benefit from the €1.5bn tax cut proposal.

Taoiseach Leo Varadkar’s party is claiming, based on Department of Finance and Revenue data, that just under 1.9 million taxpayers will benefit from a €100 increase in personal tax credits with 1.3 million of them benefiting from increasing the amount at which the 40pc income rate tax rate kicks in by €4,000 to €44,000.

But Fianna Fáil has pointed to the official Revenue ready reckoner which shows that just under 650,000 income earners pay the higher rate – not 1.3 million.

A Fianna Fáil source said last night: “It is not appropriate to pick one measure at this stage when there is a detailed budget process yet to be undertaken.

“All measures including pensions, working age welfare payments and other expenditure commitments have to be considered together as part of the formal Estimates and Budget process.

“The ready reckoner is the published official source on taxpayer units who benefit and don’t benefit from tax measures.”

Although the 650,000 figure in official Revenue data includes as one unit a couple who both pay income tax but are jointly assessed, an estimate for how many of these units are in effect two taxpayers who would benefit from Fine Gael’s changes is not officially available.

The pre-Budget row was sparked by three Fine Gael ministers calling for the tax cut in an opinion piece in Monday’s Irish Independent, a measure that met with a bitter backlash from Fianna Fáil, labelling it “populist”.

Green Party leader Eamon Ryan intervened yesterday in a bid to defuse the row, saying negotiations “are best done behind closed doors, and not promising everybody everything”.

Amid a war of words, former ministers in both Fianna Fáil and Fine Gael are united in lobbying for substantial increases in the weekly pension in Budget 2024.

Fianna Fáil TDs Willie O’Dea and John McGuinness, both former ministers, called for increases to the weekly pension of €15-€20 a week, while former Fine Gael ministers also backed moves for double-digit increases to the current rate of €265 per week.

It comes after Mr Varadkar confirmed in the Dáil earlier this week the pension would be increased. The pension was increased by €12 in last year’s Budget but projected surpluses of €26bn this year and next have heightened expectations of an even bigger hike this year.

Mr O’Dea said: “If the increase just matches inflation, it would be just standing still. But if we were to improve it for a lot of pensioners, it would have to be more than inflation.

“You’d be talking in and around €15 and €20, you have to be talking around those terms. Living alone allowance also has to be increased significantly in my view, as if one pensioner dies in a retired couple, the income is halved, but the expenses aren’t.”

Mr McGuinness told his parliamentary party colleagues in a private meeting that he wants to see increases of between €15 and €20. “I also want to see supports for those who are on lower incomes who are working, greater payments to county councils to honour grants for the elderly and the less mobile in their homes,” he said.

“[Fine Gael] may have its agenda but it doesn’t mean backbenchers [in Fianna Fáil] don’t have demands.”

Cavan-Monaghan TD Niamh Smyth said she was in favour of increases over €10. “The older population are under particular pressure because they have very limited disposable income,” she said.

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