Middle income families to be hit for over €700m in tax hikes – McGrath

Fianna Fáil Finance spokesperson Michael McGrath has stated that Government plans in relation to tax relief for medical insurance and mortgage interest will take €720m annually from the pockets of hard working families in the years ahead.

Deputy McGrath commented: “In last year’s Budget the Government substantially reduced the tax relief on medical insurance premia by restricting it to the first €1,000.  This took €127m from families.  The recently published White Paper on Universal Health Insurance is extremely vague on the subject saying the Government “may wish to examine further the issue of tax relief.” The inability of the Government to commit to retaining this vital support for people paying their medical insurance can lead us to only one conclusion, that it will be abolished as part of the implementation of Universal Health Insurance.

“According to a recent PQ reply to me, tax relief on medical insurance even at its reduced level is still worth €370m annually. Taking away this support will be a crippling blow for people who are grappling with massive annual increases in their premium levels. In addition the premium for the standard insurance package will be up to €1,600 per person according to Department of Public Expenditure and Reform.

“We know the Government is already phasing out mortgage interest relief. It will be fully abolished by 2017.  This relief is worth €350m to households in 2014. While interest rates are currently at record low levels the abolition of mortgage interest relief is likely to coincide with increases in both variable and tracker rates.

“The Government’s claim that they have not increased income tax is shown to be utterly false in the face of these two tax hikes which will together take €720m from primarily middle income families. Suggestions by Ministers that they want to ease the income tax burden in this year’s budget should be seen in the context of these impending tax increases. The Government needs to rethink the overall impact of its policy and ensure that families that have already borne a heavy burden are not hit with punitive tax rises.”