Labour leader Brendan Howlin has accused the Government of attempting to "shrink the tax base" and of planning to provide tax cuts in next week's budget to the top 20 per cent of earners.
But Tánaiste Simon Coveney insisted that "we are advocating a modest package for middle income earners who are moving into the high tax bracket on very modest salaries".
Mr Howlin said the Government had to choice to either cut taxes or cut poverty and he described as “misleading” comments by the Taoiseach that it was ordinary workers who would benefit.
The Wexford TD said figures from the Revenue Commissioners data were clear that “the only people paying at the top rate are 19 per cent of workers. That top one fifth can’t be the squeezed middle.”
He claimed during leaders’ questions that the Government was cutting taxes for the top fifth of wage earners rather than reducing the burden on all tax payers by providing services.
Extra investment
Mr Coveney said the Government was investing an extra €3.5 billion in services “and you’re calling for more expenditure”.
He said Ireland was very unusual in that it is asking workers to pay the higher rate of tax when they are earning €35,000 or under.
The modest changes would bring Ireland closer to international norms.
“We are shown to have one of the most progressive tax systems anywhere in the world,” he said.
“We also need to recognise that middle income families also need a break.”
Mr Howlin said however that the base income divide between the rich and the poor in Ireland was manifestly much broader than any of Ireland’s neighbours.
“It is shocking that one quarter of workers are earning less than the living wage.”
The Tánaiste said the Government was making a choice to spend in an appropriate way, not to overspend or over-borrow “in a way we cannot afford. Minister (for Finance Paschal) Donohoe will not do that”.
He said there had been an increased in spending of 25 per cent on schools, housing, roads and other projects. “We have worked hard to create that possibility to ensure that Ireland is now in apposition were we can spend more to look after the population in a way that a modern economy should,” while being prepared for future challenges.
