Fresh differences over contentious Fine Gael €1,000 budget tax cut proposal

The Government is facing fresh differences over a contentious Fine Gael proposal for a €1,000 budget tax cut, with Fianna Fáil sources sceptical of claims over how many people would benefit from the plan.

Costings compiled by Fine Gael suggest that the plan would cost €1.5 billion overall and 1.9 million taxpayers would benefit – with nearly 1.3 million gaining from the main part of the package, a €4,000 increase in the level at which people begin paying tax at 40 per cent.

Revenue figures used by the party state that 647,200 people pay at the higher rate and it is generally accepted that the true figure is higher. There is, however, deep scepticism in Fianna Fáil that the number to benefit would be as high as 1.3 million, double the published number, even if the Revenue figure is an underestimate.

Fine Gael’s plan would aim for a €1,000 benefit driven by a combination of the change in the rate bands and a €100 increase in personal tax credits from €1,775 to €1,875. The party says its figures are based on data from the Department of Finance and the Revenue Commissioners.

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Controversy emerged this week following a newspaper article written by three Fine Gael Ministers of State which argued tax breaks worth €1,000 should be targeted at full-time workers on an average wage of €52,000.

The article was seen as unwelcome budget kite-flying by multiple sources within Fianna Fáil, leading to criticism from the party in the early part of the week. TDs and Senators from Fine Gael then strongly criticised Fianna Fáil at a private party meeting, while Tánaiste Micheál Martin suggested to his party that the article undermined established budget procedures.

Green Party leader, Eamon Ryan, sought to calm tensions on Thursday, saying budget negotiations should be done behind closed doors. “The budget is the time to set out what we are doing on the economic management of the country. I think the public would get rightly annoyed if we spent the next four months doing the budget negotiations in public.”

Another Government source said it was “not appropriate” to pick just one measure when the budget process is yet to be undertaken, saying fiscal policy would be considered as part of the Summer Economic Statement.

Sinn Féin’s finance spokesman Pearse Doherty said the issue was a “manufactured row from within Government” to distract from the impact of the cost of living crisis on voters. “Any tax package in the upcoming budget must be fair. What Fine Gael are proposing fails the fairness test.”

He said the three Fine Gael junior ministers would benefit under the proposals five times as much as someone earning €40,000 or less. “How is that fair? It clearly is not.”