There is strong support for changes to tax rate bands in tomorrow's Budget, according to a new survey by Taxback.com.
Tax cuts for the so-called 'squeezed middle' are likely to be a priority for the Government, with a new 30% income tax band under consideration.
However, while 50% of people would support such a measure, 40% of those surveyed said they had no idea what a new 30% income tax band would mean – or how it might put more money back into their pocket.
The survey of 1,500 people throughout the country found that 46% would support the indexing of tax bands - where the various tax bands are adjusted to ensure that people are no better off or worse off because of inflation.
Meanwhile, 42% don't fully understand what indexing is and would prefer if more simple terms were used by Government.
"The prevailing message from respondents was that decision-makers need to stop using complex terminology when it comes to describing planned Budget measures, to ensure those who will be affected most can have some understanding of the impact of such changes to their day-to-day life," said Marian Ryan, Consumer Tax Manager at Taxback.com.
"Many people are frustrated with those in power simply assuming that the lay person knows what they are talking about.
"It's understandable that the people who are likely to be impacted by such a change are aggrieved at the fact that they don’t know what it will actually mean in terms of the impact it could have on their day-to-day living," she added.
The team at Taxback.com has also examined the tax savings that would be up for grabs for workers if Budget 2023 saw either an increase in the Standard Rate Cut Off Point (SRCOP), which is the amount of money which workers can earn before going onto the higher rate of income tax, combined with increases in tax credits, which reduce the amount of tax you pay – or the introduction of a new 30% income tax rate.
For example, Taxback.com worked out that a worker on a salary of €40,000 could save €800 a year in tax if they could earn another €3,000 before going onto the higher rate of income tax and if tax credits were also increased by €100.
A worker earning €80,000 would also save €800 a year if such tax changes were introduced.
The figures show that savings for lower or average earners if a new 30% income tax rate were introduced would not be as significant as they would be if the SRCOP and tax credits were increased.
A worker earning €40,000 would only save €320 a year in tax if a new 30pc income tax rate were introduced – while a worker on a salary of €80,000 would save €500.
The Taxback.com figures assumed the 30pc rate of income tax would apply to €3,200 of the earnings of the worker earning €40,000 – and €5,000 of the earnings of the worker earning €80,000.
If the 30% income tax rate applied to €10,000 of the earnings of a worker on a salary of €80,000, that worker would save €1,000 in tax – indicating that higher earners would benefit more from a new 30% income tax band than lower earners would.
