Tánaiste confident of pension, tax and welfare packages in Budget 2022
The Tánaiste has told business leaders that he is confident that the Government is in a position to include a pension, welfare and personal income tax package in next month’s Budget and needs to.
Leo Varadkar also said that index linking income tax credits and bands is in the Programme for Government and that to not implement it would be a tax increase.
“We are ahead of where we thought we might be at this point in the economic cycle,” the Minister for Enterprise told Ibec members at a closed event this evening to mark the appointment of the organisation’s new President, according to his prepared remarks seen by RTÉ News.
“Given the economic figures that are informing our pre-budget discussions, I am confident that we are in a position to – and need to – include a pension, welfare and personal income tax package in next month’s Budget.”
“For me, it’s a question of fairness. As we see a return to inflation and a rise in the cost of living, we need to protect people’s standard of living – pay increases, tax reform, worker and pension increases.”
The Tánaiste said in the years ahead we will need every voice possible out there arguing the reasons why the country needs to stay competitive on personal taxation especially for middle income earners.
Mr Varadkar also outlined how while the legacy of the pandemic will be a larger State, that does not necessarily mean more taxes.
“As corporation tax revenues are likely to shrink, we need to be creative in the ways in which we raise revenue,” the Tánaiste’s script said.
“The largest opposition party wants to heap taxes on business to pay for their promises. Specifically, a very large increase in employer PRSI of 4%.”
“While modest increases in PRSI might be justified to improve benefits, or to fund affordable healthcare or childcare or higher education they are not justified to avoid reform or to pay for populism.”
On the topic of corporation tax reform, Mr Varadkar said if Ireland were to move away from its low and stable rate, it would need to be certain about what it is being asked to agree and implement.
“For many jurisdictions, there are only benefits and no costs to signing up for corporate tax reform, the opposite is the case in Ireland as there will be Exchequer implications and an adverse impact on our competitiveness,” he said.
He added that this and other competitiveness risks mean Ireland will have to be creative about how to preserve its reputation as a world-class place to do business.
“As always it will be about talent and track record as well as tax but it must be about other things too like security and infrastructure and liveability,” he said.
The Tánaiste also told the employers that he wants to use his remaining 15 months in the enterprise portfolio to see through a series of reforms.
These include flexible working, occupational pensions for all workers including auto-enrolment, statutory sick pay from next year, a living wage also beginning to be phased in from 2022 or 2023 and clear regulations around tips and gratuities for workers and customers.
The measures, Mr Varadkar argued, would help build a more inclusive, secure and just society.