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Budget 2018: small minimum wage increase set to be eaten up by tax - Maurice Quinlivan TD

11 October, 2017 - by Maurice Quinlivan TD

Sinn Féin Spokesperson on Business, Enterprise and Innovation Maurice Quinlivan TD today said that workers on the minimum wage will see almost half their new increase hoovered up by tax.

Speaking from Leinster House, Deputy Quinlivan said;

“The small 3% increase in the minimum wage will do little for workers trying to deal with the escalating cost of living, but the government failed to mention yesterday that almost half the additional money minimum wage workers will gain as a result, will be taken back in tax.

“The budget will see a worker earning €18,000 see their effective tax rate increase from 2.8% to 4.2%.

“For example, a worker earning the minimum wage, working 37.5 hours a week, will now earn €18,584, an increase of €584 on last year due to the thirty cent increase per hour.

“However, due to this increase in earnings, the worker will pay an additional €117 in income tax and €166 in PRSI, while paying €19 less in USC, meaning that the €584 gain will be slashed to €320, or just an additional €6 per week, not the €11.10 extra per week as envisaged by workers.

“It is disgraceful that workers in this low wage bracket will see their effective tax rate increase by 1.4%, while workers who earn €100,000 will see their effective tax rate drop by 0.3%.

“This clearly shows whose side Fine Gael is on.

“Sinn Féin’s alternative budget provided for this and allocated over €21 million in funding to avoid workers or employers being targeted due to an increase in the minimum rate.

"In tandem with increasing the minimum wage to €10 per hour, Sinn Féin would proportionately increase the employee and employer PRSI bands to ensure that neither employees nor employers are penalised with PRSI increases.

“This would mean an increase in the amount workers can earn before they pay the full rate of PRSI by €29.25. We would also increase the upper threshold for the 8.5% Employers PRSI rate to €406 per week so that employers are not disadvantaged by the higher rate of PRSI.

“People on the minimum wage can barely make ends meet as is. This is evident in the fact that over 57,000 workers are now in receipt of the Family Income Supplement.

“Ireland has a problem with low pay and yesterday was an opportunity to help these low paid workers, but unfortunately due to this government’s choices almost half their rise will be taken back in tax."

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