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Press Release

Pre Budget Day commentary and Commission on Taxation Report

Kevin Devenney, Director in Tax at Grant Thornton Ireland said:

'The government’s stated aim is to adjust the income tax bands and credits so that lower and middle income earners don’t climb into the higher 40% tax bracket as soon. In recent years, the bands have increased by approx. €1,000 - €1,500; and the main personal tax credits by around €100, however, given the current inflationary pressures, such adjustments may not go far enough in this year’s Budget. The mooted “middle income” tax rate of 30% is still on the table according to reports from the Tánaiste’s office however, there seems to be little appetite for such a new rate among other political parties.

'The Commission on Taxation and Welfare Report is quiet on such a new tax rate but rather focuses on broadening of the income tax base and greater equity in the income tax system over the medium to long term.

'An area on everyone’s mind and most likely to feature in the Budget, is the rising cost of electricity and gas. The 9% VAT rate applicable to electricity and gas supplies may be extended beyond the expiration date of 31 October 2022. In addition, an increased energy tax credit(s) is anticipated for individuals and businesses and further grants for energy efficient products may be provided for. However, in tandem with these measures consideration will also need to be given to any shortfall in Carbon Tax revenue as a result of the gradual phasing out of fossil fuels.

'While the Commission on Taxation and Welfare Report contains some interesting and sound tax proposals, the focus is the medium to long term economy looking through the present inflationary difficulties.

'The action needed now in Budget 2023 is to use the tax system to tackle the current cost of living and energy crises, balanced with the demands of housing and climate and future proofing the tax system.'

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