Reduced income tax good news for investment, employment - Central Bank

According to a study conducted by the Central Bank, this measure will stimulate economic growth, increase the available income of households and reduce unemployment.

A study conducted by the Central Bank has predicted positive economic outcomes thanks to the reduction in income tax rates.

According to the study, this measure will stimulate economic growth, increase the available income of households and reduce unemployment.

The effect of the reduction in income tax is expected to lead to a permanent increase of 0.3% of the gross domestic product annually. By the end of this legislature, the study predicts, families will have benefited from increased national wealth of around €200 million, or an average of €40 million a year, through the implementation of this measure alone.

It also estimates that the reduction in income tax will affect about 44,400 people, raising household income by 2% and boosting disposable income by about €1,440.

The removal of income tax for people on minimum wage and lower pensions is expected to benefit some 7,500 people, raising their incomce by 1.2%.

These tax cuts are expected to lead to the creation of some 800 new jobs, an increase of 0.4%.

The report suggests that initially the main economic impact of the tax reduction should be felt in private consumption. Eventually however it also anticipates a positive impact on investment, a 0.7% rise as a result of the demand generated by the reduction in income tax.