Biography: Phillip Ryan and Niall O’Connor with Josepha Madigan at the launch of ‘Leo: A Very Modern Taoiseach’. Photo: Arthur Carron

A tax cut worth €600 for the average worker within two years is a key plank of Taoiseach Leo Varadkar's wish-list for a new deal with Fianna Fáil.

Mr Varadkar has moved to try to embarrass Micheál Martin into renegotiating an extension to the lifespan of his minority Government by outlining his priorities between now and summer 2020.

In a letter sent to Fianna Fáil last week, the Taoiseach indicated he wants to introduce significant income tax cuts and continue with annual increases to the old age pension. But the proposals have been immediately criticised by Mr Martin, who believes the Taoiseach is trying to spark an election.

"What's happening here is that the Taoiseach and Fine Gael party, for some reason, have upped the ante. They seem to want an election," the Fianna Fáil leader said.

In his forthright letter, Mr Varadkar said his Government will not be able to function unless there is clarity about its longevity. He said doubts over when the next election might be would weaken Ireland's hand in Brexit negotiations.

"I suggest that in the interest of certainty we agree a general election date for the summer of 2020," the letter states.

Mr Varadkar says it is his "strong view" that a government cannot act in the best interests of the people "if it is living on borrowed time".

As politicians gear up for the new Dáil term, the Irish Independent understands Mr Varadkar also held a private meeting with Independent ministers to inform them of his desire to immediately open talks on extending the 'confidence and supply' deal.

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He promised to keep Shane Ross, Denis Naughten and Katherine Zappone "in the loop" over the coming weeks.

The 10-page letter outlines why Mr Varadkar believes Fine Gael has fulfilled its side of the unprecedented deal, struck after the 2016 election.

He admits the Government is "struggling to make sustainable improvements to public healthcare".

"And, while there is now some cause for optimism, the housing crisis persists with a shortage of new homes for first-time buyers and increased numbers of people living in emergency accommodation. Without doubt, there is more to do."

But the Taoiseach added that the economy is "powering ahead at a much faster rate than projected and we are approaching full employment".

His pitch to Mr Martin includes a long, but "not exhaustive" list of items for a renewed deal.

Under the heading 'Prudent Management of the Public Finances', Mr Varadkar says there is a need to tackle the top rate of income tax.

"The standard cut-off point will be raised to €37,500 (single), €46,500 (single income couple) and €75,000 (dual income couple) - subject to transferability rates," he said.

This would mean a single person earning €40,000 would be paying €590 less annually by the time of Mr Varadkar's proposed 2020 election.

The Taoiseach also commits to limiting property tax rises, and to increase the State pension and social welfare rates at or above the rate of inflation.

Speaking to 'Euronews', Mr Martin said he has given the Government "space and stability" in relation to Brexit so the Taoiseach's actions were "not good politics".

"I think it's putting the party before the country, in terms of Fine Gael. If they want an election, that's their business, but they should be honest about it." He insisted talks on a new deal cannot begin until after Budget 2019 is presented to the Dáil on October 9.

And it came as Exchequer data showed tax receipts were behind target in the first eight months of the year, with a shortfall of 0.3pc. Conall Mac Coille, of Davy Stockbrokers, said the figures were disappointing. He said there will be precious little room for manoeuvre in the Budget.

Irish Independent