Leo Varadkar: Pension and social welfare rises needed in Budget
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Pension and social welfare increases, as well as a personal income tax package, need be included in next month's Budget, the Tánaiste has said.
Suggesting the Government may have more wiggle room for Budget giveaways, Leo Varadkar said the economy is performing well and "we are ahead of where we thought we might be at this point in the economic cycle.”
A significant increase in employer PRSI, which has been suggested by Sinn Féin, also appears to be ruled out with Mr Varadkar stating: “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.”
However, speaking at an IBEC event, Mr Varadkar said: “As corporation tax revenues are likely to shrink, we need to be creative in the ways in which we raise revenue."
Mr Varadkar stressed the need to make sure that the last 18 months have not been "in vain" and we must secure "a pandemic dividend".
He hopes to introduce statutory sick pay in 2022, the living wage on a phased basis later that year or in 2023, and with auto-enrolment following on from that.
Mr Varadkar said that a legacy of the pandemic will be "a larger State" but this does not necessarily mean more taxes especially when you have growth in employment, business and wealth.
Turning to the upcoming budget, Mr Varadkar said: "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.”
Mr Varadkar added that index-linking credits and bands is in the Programme for Government and that not doing so would be "a tax increase".
He also urged IBEC to argue in the years ahead "why we need to stay competitive on personal taxation especially for middle-income earners who already pay among the highest tax rates in the OECD".
As Public Expenditure Minister Michael McGrath hammers out the finer details of the Budget, he has admitted that granting 10 days' leave by way of a Covid-19 recognition bonus to all public sector workers could cost in excess of €1bn.