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Tánaiste Leo Varadkar has signalled that the minimum wage will increase in the budget.
He said in the Dáil that “there will be pay increases in most parts of the economy in the coming year, including the public service, as well as an increase in the minimum wage”.
The Low Pay Commission is understood to have recommended an increase in its report to Government to the current minimum wage rate of €10.20 an hour but Mr Varadkar did not indicate the level of increase that would be introduced.
With such increases they needed indexation of tax bands, he told Independent TD Michael Fitzmaurice, insisting they were not tax cuts as Sinn Féin had described them.
Pay increase
The Government was “just making sure that middle Ireland holds on to whatever small pay increase or increment they get”.
He said that “if they are earning €40,000, which is roughly the average income, and they get a pay increase of 2 per cent, that is €800. At the moment, someone would lose half of that in tax and would only get €400.
“That is not enough to keep up with the rise in the cost of living. With indexation, they will keep most of that €800. They will get €650 or €700. That is the whole point of indexation. It is not a tax cut.”
Mr Varadkar also reiterated that the Government is looking at issues like an “increase in the fuel allowance and increases in pensions and social welfare so that people can keep up with the rise in the cost of living”.