Labour to cut standard rate of tax to 18%

[Coles]

Here's the relevant section of the speech in full

Economic growth brings resources and choices. I have said taxes are down and will stay down.

In the recent budget, the Minister admitted that he was five billion euro better off than he had forecast a year earlier. Growth at 4.5% over 5 years will generate at least 11 billion Euro in additional revenues for the Exchequer. I want those resources to deliver public services that will add to our quality of life. But with investment, must come reform. Those with the strongest commitment to public services have the greatest interest in seeing them change.

Year on year, this Government has levied more taxes and wasted more taxes than any Government since the foundation of the State. Given the opportunity to cut tax rates, Fianna Fáil and the PDs made the choice to cut the top rate. They have now committed to another cut in the top rate from 41% to 40%. That's the Fianna Fáil/PD way. Its not the Labour way.

When you cut the top rate of tax, those who have most, benefit most.

If you cut the lower or standard rate all taxpayers benefit but those on middle and low incomes gain most.

Therefore, given the resources available, within 2 years of being returned to Government Labour will cut the standard rate from 20% to 18%.

In fairness, I think it should be welcomed. When Pat says that taxes will 'stay down' it could be interpreted that the cut in the standard rate will be balanced by a rise in the higher rate. Thus income tax receipts 'stay down'.

[Clon]

I just tried the hookhead tax calculator to compare someone earning €36,000 after the cut to 18% and after all taxes and credits etc. they gain €680 from the cut for a single person. €34,000 is their standard rate cut off point, if their tax credits were expanded by €680, or the standard rate expanded by €1700 either of these would have resulted in the same outcome as the tax cut. My point being that the first port of call with taxes for a socialist party should have been the tax credit, which helps the lowest paid first.

See hookhead

[qtman]

Given the opportunity to cut tax rates, Fianna Fáil and the PDs made the choice to cut the top rate. They have now committed to another cut in the top rate from 41% to 40%. That's the Fianna Fáil/PD way. Its not the Labour way.

"Given the resources available, within 2 years of being returned to Government Labour will cut the standard rate from 20% to 18%."

Pat never fails to show off his Leaving Cert grasp of macro-economics.

The vast majority of income tax is gathered at the standard rate. A 2% cut would leave a hole the size of Texas in the public finances, and then you have Brendan Howlin on the radio this morning claiming that the electorate know that Labour are the party who can properly manage public services.

How bizarre that a party who claims to be Social Democratic is teeing up its election campaign with promises of tax cuts.

[culbair]

In the absence of a commitment to widen the tax-bands, one has to view this promise with a certain cynicism.

FF/PDs would know all about not indexing tax-bands.

[qtman]

I just tried the hookhead tax calculator to compare someone earning €36,000 after the cut to 18% and after all taxes and credits etc. they gain €680 from the cut for a single person. €34,000 is their standard rate cut off point, if their tax credits were expanded by €680, or the standard rate expanded by €1700 either of these would have resulted in the same outcome as the tax cut. My point being that the first port of call with taxes for a socialist party should have been the tax credit, which helps the lowest paid first.

hookhead

Can you edit this post to remove this ridiculously long url?

My screen width is now twice what it should be...

[RainyDay]

nowhere have i seen him ruling out raising the top level. Does this mean he will??

You mean apart from his repeated statement (starting from last year's conference - 12 months ago) that 'taxes are down, and will stay down'? Please get real.

As a Labour party member, I find this move a little disconcerting. Are we trying to beat the PDs at the tax-cuts game? Are we satisfied that public services in the very basic areas of health, education and housing are as good as they are going to get, and don't need further investment.

My concern is not about raising the upper rate or not extending the standard rate band - my concern is that Labour as a party isn't about cutting taxes.

[KingKane]

In the absence of a commitment to widen the tax-bands, one has to view this promise with a certain cynicism.

What like your lot didn't even do to keep pace with inflation for the first 3 years of this government?

[Clon]

I just tried the hookhead tax calculator to compare someone earning €36,000 after the cut to 18% and after all taxes and credits etc. they gain €680 from the cut for a single person. €34,000 is their standard rate cut off point, if their tax credits were expanded by €680, or the standard rate expanded by €1700 either of these would have resulted in the same outcome as the tax cut. My point being that the first port of call with taxes for a socialist party should have been the tax credit, which helps the lowest paid first.

hookhead

Can you edit this post to remove this ridiculously long url?

My screen width is now twice what it should be...

Sorry for that

[qtman]

As a Labour party member, I find this move a little disconcerting. Are we trying to beat the PDs at the tax-cuts game? Are we satisfied that public services in the very basic areas of health, education and housing are as good as they are going to get, and don't need further investment.

My concern is not about raising the upper rate or not extending the standard rate band - my concern is that Labour as a party isn't about cutting taxes.

A point well made. Its such a cop out on Labours part.

You could see some justification in this lurch to the right if it had resulted in better poll results, but given that it hasn't, what is the motivation?

You should leave and join the GP or SF. Both still have principles and have as much chance of being in Government as Labour.

[tonys]

Here's the relevant section of the speech in full

Economic growth brings resources and choices. I have said taxes are down and will stay down.

In the recent budget, the Minister admitted that he was five billion euro better off than he had forecast a year earlier. Growth at 4.5% over 5 years will generate at least 11 billion Euro in additional revenues for the Exchequer. I want those resources to deliver public services that will add to our quality of life. But with investment, must come reform. Those with the strongest commitment to public services have the greatest interest in seeing them change.

Year on year, this Government has levied more taxes and wasted more taxes than any Government since the foundation of the State. Given the opportunity to cut tax rates, Fianna Fáil and the PDs made the choice to cut the top rate. They have now committed to another cut in the top rate from 41% to 40%. That's the Fianna Fáil/PD way. Its not the Labour way.

When you cut the top rate of tax, those who have most, benefit most.

[color=blue]If you cut the lower or standard rate all taxpayers benefit but those on middle and low incomes gain most.[/color]
Therefore, given the resources available, within 2 years of being returned to Government Labour will cut the standard rate from 20% to 18%.

In fairness, I think it should be welcomed. When Pat says that taxes will 'stay down' it could be interpreted that the cut in the standard rate will be balanced by a rise in the higher rate. Thus income tax receipts 'stay down'.

This claim just isn’t true, in order to gain the maximum benefit from a 2% cut in the standard rate, you must earn at least up to the cut off point of 34,000 (680), it must follow that anyone earning less than 34,000 will gain less, as with all tax cuts the more you earn the more you gain.