I will look at the tax promises of the three largest parties, Fine Gael, Fianna Fail, and Sinn Fein, from Election 2024. Shifting through election manifestos the night before the election wasn’t in the plan for last night. But then when I got into it, I found some of the promises were very interesting. And even a few were quite scary. Some had more detail than others and some covered more taxes too. We’ll start the way the leaders were lined up in the election debate on Tuesday night.
- Fine Gael
- Sinn Fein
- Fianna Fail
- Common themes
- Review
Fine Gael
Fine Gael is promising to continue what we have seen in the last few budgets. As budget 2025 is already in place and signed into law the tax changes will come into effect from 2026 onwards. Their main tax promises are
Increase the lower tax band threshold. This is the amount you earn at the lower rate before going into the top band of 40% The lower rate for 2025 is €44,000. They promise to increase the lower rate band by at least €2,000 each year. So, by 2030, the lower rate band will be €54,000
Boost the main tax credits. They will increase the Personal, Employee, and Earned Income Credit by €75 annually. That would be a minimum increase of €150 per employee or self-employed person. That doubles to €300 per year for a working/self-employed couple.
Adjust USC thresholds. They will raise the entry threshold for the 3% USC rate from €27,382 to €40,000. And they will also raise the entry threshold for the 8% USC rate from €70,044 to €75,000. We must assume this is over the 5-years 2026 to 2030. FG will abolish the 3% surcharge on self-employed income over €100,000.
Enhance Benefit in Kind. They talk about new BIK rules to support health and wellbeing activities such as gym membership or dental care.
Increase Gift/Inheritance Tax thresholds. They will raise the thresholds as follows
- Group A (children) €500,000
- Group B (siblings and blood relatives) €75,000
- Group C (others) €50,000
Sinn Fein
The Sinn Fein strategy is to reduce tax for those that earn less than €100,000. And for those that earn more than €100,000 will pay more.
Abolish the USC on the first €45,000 you earn.
Abolish the Local Property Tax. The plan is to replace this with direct funding for Local Authorities
Stop all planned increases to carbon taxes from 2025 to 2030.
Reverse the two most recent hikes to excise duty on petrol & diesel.
Introduce a 3% solidarity tax. This is on individual incomes above €140,000
Reform tax credits for individual incomes above €100,000. By reform that must mean reduce!
Increase Stamp Duty for the bulk purchasing of residential homes.
Phase out the Help to Buy Scheme. This is in conjunction with them delivering “genuinely affordable homes”
Scrap the budget 2024 landlord tax relief. This is worth €3,400 to a landlord over the 4 years 2024 to 2027. SF can’t scrap 2024 which is worth €600. If they get rid of this a landlord will lose up to €2,800.
Tax the ownership of multiple residential properties.
Reduce Tax subsidies on gold-plated pensions. They give no details about what a gold-plated pension is.
Abolish Stamp Duty for first-time buyers. It will be on properties up to €450,000.
Establish a Wealth Tax Commission. The goal is to “advise on the most effective means of implementing a net wealth tax”
Fianna Fail
Fianna Fail’s tax promises seem to be like Fine Gael’s ones. Their headline promises include
Increase the lower rate band to €50,000. As mentioned, the amount you earn at the lower rate before going into the higher rate.
Reduce USC. They plan to reduce the 3% rate to 1.5% “at a minimum over the lifetime of the Government.” Like FG they also plan to abolish the 3% USC surcharge on non-PAYE income over €100,000 to support the self-employed.
Increase Income Tax credits by €100 per year. They give that number as a minimum amount.
Examine reducing Capital Gains Tax. They will do this to “encourage innovation…..and attract foreign investors into Irish business”
Annually increase tax credits. They refer to tax credits to support families, carers, blind people, dependent relatives, and those with additional needs.
Increase and adjust the inheritance tax thresholds in each budget. Such a measure is to reflect the increase in property prices in recent years. They also mention a review of the inheritance tax thresholds when the deceased doesn’t have children.
Introduce a tax credit on gym membership. “And explore other options to encourage active participation in sport and exercise”
Common Themes
All parties commit to the 12.5% Corporation Tax rate. Plus, they all look to enhance and reform the Research & Development Tax credit. FF and FG have very similar income tax measures to increase the lower rate band and increase tax credits. So, the budgets we got over the last few years would continue if they get elected.
If we go from 2020 to 2025 the lower rate band for a single person has gone from €35,300 to €44,000. FF plans to go to at least €50,000 and FG to €54,000. Remember every €2,000 increase in the lower rate band is worth €400 to you. SF is silent on moving the lower rate band and increasing tax credits.
Over the same period 2020 to 2025, the single personal tax credit went from €1,650 to €2,000. The employee tax and earned income credit followed the same path. In 2025 a single PAYE worker will have €4,000 of tax credits. That person would pay no Income tax on an income of €20,000 but would pay a small amount of USC.
Review
On taxation policies alone you won’t go for Sinn Fein if you are a higher earner, a landlord, or have a “gold-plated” pension. Their “solidarity tax” would push the top rate for the self-employed to 58% and 55% for employees. My view is that if you are already paying 55% and 52% you are paying your fair share as it is. Paying tax at that rate is showing solidarity.
Let’s remember that Ireland has one of the most progressive tax systems in the world. In simple terms, the more you earn, the more you pay. The top 20% of earners pay 80% of the Income Tax take. SF are looking for them to contribute more. Does that offer an incentive to higher income-earning workers to return or come to Ireland? Throw a wealth tax into the mix and things get ugly.
Both FF and FG will get rid of the very unfair 3% USC surcharge on self-employed workers so their top tax rate will be 52%. The same as for PAYE workers. That’s a 6% difference between these two parties and SF.
Under SF any landlord will be worse off by €2,800 at a minimum. I don’t understand how taxing multiple properties will work. Do landlords not pay their Income Tax on the rental profit and pay Capital Gains Tax on any gains when they sell the property? My fear is that small landlords will exit the market which will push up rents. It’s easy for them to exit given the property will sell very quickly. And you could have a situation where a landlord has two properties and decides to sell one to avoid the “new tax” on multiple properties.
Erode Tax Base
This is not an SF-bashing exercise. They will appeal to workers on lower incomes trying to get on the housing ladder. That’s on the basis that they deliver on their affordable housing plan and have no stamp duty for first-time buyers on a house up to €450,000. Taking out USC on incomes of less than €45,000 will be attractive to many too. My fear is that they are eroding the tax base to a greater extent. Remember they want to scrap the Local Property Tax too. That’s a tax that is bedded down and works very well. Plus, the money goes to the local authority of the area you live in.
Anyway, I’m happy to have looked at these issues so I’ll have it as a record for Election 2030. I’ll finish with this
” It’s useless to hold a person to anything he says while he’s in love, drunk, or running for office.” Shirley MacLaine
At Comerford Foley, we keep our word to look after you and your business. If interested, start here
