The Taoiseach has warned that without income tax cuts, lower paid workers will end up paying more of their salary at the highest tax rates.

Yesterday, the Irish Congress of Trade Unions strongly criticised the Government's plans for tax cuts describing it as sleight of hand, that would transfer a higher cost of public services to workers and their families.

However, addressing the ICTU Biennial Conference in Dublin, Leo Varadkar defended his plans to cut income tax, and reiterated that nobody earning the average wage should pay any of their tax at the higher rate.

He said that Ireland was generally a low tax country, but there was some unfairness in the tax system.

He noted that the average full time worker over the age of 25 is now earning over €47,000 a year, but said it was unfair that they pay "quite a chunk" of their income at the highest tax rate.

Mr Varadkar said he wanted to get to the point where a person on the average wage does not pay any of their tax at the highest rate.

He warned that if they did not do that, more and more people, including lower paid workers, will end up paying the highest tax rate over the years.

He cited Health Service Executive support staff currently seeking pay rises - and noted that those increases could bring lower paid workers into the higher tax band - and see them losing a proportion of their increases in tax.

Mr Varadkar said there were three ways of raising living standards, increasing pay, reducing taxes to allow people to keep more of their own money, and reducing the cost of living through initiatives like free education or subsidised childcare.

He said that in a well managed, growing economy, they could do all three.

Mr Varadkar said that average household was around €1,500 a year better off compared to three years ago due to cuts in tax and the Universal Social Charge, along with increases in welfare and pensions.

He said that was not to be discounted, as it was the equivalent of a month's rent, mortgage payment or childcare for many people.

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He cited other initiatives including universal childcare subsidies for every child from six months to two years, expanded free GP care, and maternity benefit.

He said he believed they could do a lot better on all three fronts over the next five years.

Mr Varadkar said they would have a tax package of around €600m next year, but would still have around €3bn to spend.

Meanwhile, the Taoiseach has announced a citizens' assembly to look at ways of closing the gender pay gap.

The Government is already rolling out legislation to force employers to publish details of pay gaps in their enterprises.

Mr Varadkar said the "breadwinner model" no longer exists in the modern era and women are now the main earners in many cases. 

He told ICTU delegates that free GP care will be extended to seven and eight-year-olds next year, and forecast that the next increase in the National Minimum Wage recommended by the Low Pay Commission will bring it above the "psychological barrier" of €10 an hour.

On housing, the Taoiseach denied that the Government had an ideological preference for buying or leasing from developers, rahther than building through local authorities. 

He said home ownership should be at the core of housing policy and people in their 20s and 30s should be able to aspire to own their own home.

He said local authoirities had lost the ability and knowledge to build social housing - but they were now building that back up again. 

He pledged that every year they would increase the social housing stock, as well as the proportion of those built directly by local authorities and housing bodies.