In this episode, Niall speaks to journalist Laura Perrins about Simon Harris’s proposed tax cuts and asks whether Irish workers should really be celebrating.
The Government is planning a €1.5 billion tax package for Budget 2027, which could see the point at which workers begin paying the 40% income tax rate rise from €44,000 to €46,000. For some workers, that could mean an extra €400 in their pocket over the course of a year.
But Laura argues that once fiscal drag is taken into account, much of the package is not a genuine tax cut at all. The Department of Finance estimates that more than €1.1 billion will be needed simply to prevent workers from being dragged into higher tax brackets as wages rise. That leaves only a relatively small amount as a real reduction in taxation.
Ireland’s middle-income workers already carry one of the heaviest tax burdens in the OECD. The highest 10% of earners pay approximately 40% of all income tax and 60% of Universal Social Charge contributions, while many workers face marginal tax rates of up to 52%. For around four in ten workers, the Government can take more from overtime, bonuses and pay increases than the worker actually keeps.
At the same time, public spending continues to rise dramatically. Total Government expenditure is expected to reach approximately €125 billion next year, compared with less than €70 billion in 2017. Budget 2027 is expected to include an additional €7 billion in public spending alongside the €1.5 billion tax package.
The Irish Fiscal Advisory Council has also warned that spending is increasing faster than the sustainable growth rate of the economy, with overruns becoming increasingly common and the State remaining heavily dependent on potentially volatile corporation tax receipts.
With corporation tax revenues reaching €32.9 billion last year, some will question why ordinary workers are still surrendering such a large proportion of every pay rise, bonus and extra hour worked.
Is Simon Harris delivering a meaningful tax cut for the squeezed middle, or is the Government simply taking slightly less while inflation, fiscal drag and rising living costs continue to erode household incomes?
Are Irish workers being offered genuine relief, or should they be demanding far more?
