BUDGET 2011 TAX HIKES

Standard and higher rates of income tax are set to rise by up to 2% after December’s Budget and thousands of lower-income earners can expect to be dragged into the tax net, The Sunday Times reports.

A senior government source told the newspaper ministers are considering saving up to €4.6 billion through revenue increases and expenditure cuts. Workers can expect a 1% increase in the standard rate of tax, a 2% increase in the higher 41% rate and a reduction in tax credits to bring up to 100,000 lower earners into the tax net. The newspaper points to Department of Finance calculations that estimate almost a million people earn below the current taxable threshold of €18,300.

“There is only so much you can take out on capital and so much you can cut in day-to-day spending,” one government figure said. “In terms of making the leap from a €3 billion scenario to €4 billion plus, it changes everything, particularly in light of the fact that we don’t yet have water charges, or a property survey to impose the site valuation tax recommended by the Commission on Taxation last year.”