Belfast Telegraph

UK Website Of The Year

Report 'debunking election tax myths' published by business leaders

Published 08/02/2016

Ibec claims Ireland is not a low tax, low spend economy, and too many are not paying anything
Ibec claims Ireland is not a low tax, low spend economy, and too many are not paying anything

A new report claiming to debunk election tax myths has been published by business leaders.

Ibec, which represents home-grown and multinational businesses across every sector of the economy, has claimed Ireland is not a low tax, low spend economy and although tax on work is too high, too many are not paying anything.

The group stressed the need to bring the marginal tax rate down to 45% and in to line with competitor economies, and said the USC (universal social charge) should be used to provide for future pension needs.

Ibec senior economist Gerard Brady said: "The general election tax debate needs to be informed by the facts. Ireland raises more than average European countries through income tax, but our marginal rate is out of line and workers hit it too early.

"Election tax promises have focused on who will get what, but we need to ensure the tax system as a whole works to support growth and job creation."

Key findings in Ibec's Gneral Election 2016: Rethinking the tax debate report include:

:: Core taxation, which funds services such as health and education, is slightly above the European average, ninth out of 28 countries. Although Irish tax payers fork out on less social insurance than average, the system redistributes those benefits to poorer households, in contrast to other countries.

:: Other EU countries spend much more than Ireland on pensions, because they have much older populations. When you adjust for demographics, Ireland spends above the European average on health and working age benefits. However, Ireland spends below the EU average on education and investment.

:: Income taxation in Ireland, at 40% of total taxation, is the fifth highest in the EU.

:: About 50% of Irish workers pay at the top marginal rate of income tax. In the UK only 12.4% of workers pay more than 50 cent from a one euro pay increase in tax and benefit withdrawals, in Ireland the figure is 39%.

:: Under Ireland's tax credit system 32% of all income tax cases end up paying neither income tax nor USC. This compares poorly with the UK, where only 11% of income earners are exempt from income tax.

Ibec has determined that the total tax burden on the economy is about right and has recommended it should not exceed one-third of GDP over the coming years

The group has argued that plans to increase labour taxation through inc ome tax or employer PRSI contributions would damage employment growth.

The income tax system should be broad based, with top marginal rates of no more than 45%, and the entry point linked to above the average wage (currently 35,700 euro), according to Ibec.

It also claims the abolition of the USC would be a retrograde step which would narrow the tax base and pile pressure on a smaller numbers of tax payers.

Rather than abolition, part of the USC should be converted to a contribution for workers to a defined contribution pension scheme, Ibec has recommended.

Your Comments

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk

Read More

From Belfast Telegraph