The evanescent taxes still the main source of revenue collapse

Another picture, using the latest Exchequer returns, to illustrate the extent to which the tax collapse is disproportionately concentrated in just three taxes: Corporation Tax, Capital Gains Tax and Stamps. These fell by 56.5% in the first quarter of 2009 relative to the same quarter of 2008. The percentage fall in the remaining taxes was “only” 16.6%. This figure is in nominal terms–no deflation.

For a longer perspective, scaled by GDP, and showing just how systematically reliance switched to these boomtime taxes over the years — and away from the baseload taxes, take a look at the following:

(NB: recall that, because based on Exchequer returns, these do not include PRSI, etc).

5 thoughts on “The evanescent taxes still the main source of revenue collapse”

  1. The question will be of course how the government proceeds next Tuesday.

    My expectation is that they will waste a one-time only opportunity to tackle the ridiculously high social welfare budget by slashing payments to levels which reflect lower cost of living and our closest neighbours such as the UK. Decreasing even more the incentive to work. We simply can longer afford our gold-plated social welfare payouts.

    The Government will instead (of course) target the middle income group > €30k and the so called ‘fat cats’ earning more the 100k i.e. those whose voice is not represented on the streets!

    On top of doubling the levies and not dealing with social welfare, the morons in government will also abolish +/or introduce the following:

    (a)the DIRT rate 23% ceiling removed i.e. make it subject to income tax (bye bye billions of savings!!!) not to mention it wont actually raise any money as rates collapse and returns are made in Nov 2010 – but it will scare the big money overseas.

    (b) The PRSI ceiling lifted – hitting the middle/upper income bracket with a stealth 4% tax on top of levies up to 6% – Bye Bye wealth creators, entrepreneurs and prospective international employers

    (c) means test or limit child care allowances (this I agree with BUT not combined with the other hits on the middle/upper income bracket!!

    (d) announce property tax on private residence for next year: this is the most insane of all so it warrants further analysis:

    We have plenty of evidence from our pre-98 property tax days – it was a disaster which produced no net income. AND I believe if any attempt to re-introduce this it will be a spectacular failure – do we honestly think people who paid huge stamp duty and saddled with big management fees and mortgage costs will do their patriotic duty and pay? short answer is NO!!! This property tax will cost too much to collect; it will be political dynamite – up for abolition at every election.

    Contrary to David McWilliam’s view that it is not a tax on work and therefore should be pursued I would strongly disagree. For instance who does he think would be asked be pay such a tax? those who are jobless, NO; those on pensions, NO; those on low incomes NO: those on middle to high incomes YES; so in fact it would be yet another tax on work NOT to mention further damaging the already crippled property sector. Which by the way we own through our guarantee of the banking system.

    The time to consider this type of annual property tax is (if ever) only when we see clear signs of recovery so it can be truly counter-cyclical, but not beforehand.

    (e) water rates for next year – I agree with this and have no choice anyway EU requirement

    (f) reduce tax breaks on redundancy payments (excusing it by saying it will only affect to ‘rich’ i.e. payments above €100k – of course these unfortunates wont be rich for long as there aint any jobs left and the banks will want this €100k to payback loans/mortgages etc.

    (g) and of course the unexpected sneaky option – which will be designed to keep the Vincent Browne and Fintan O’Toole’s of this world happy.

    As for me and many others I will be looking at every way for me and my 30 colleagues to leave this sinking island – possibly the UK or Holland – if my dire expectations of left leaning, populous, lost opportunity budget prove correct!

    Slan

  2. The income tax figures for the first three months include two months of the levies and without that would show a good bit larger decline. The April figures will include the effects of the first month of the “pension” levy and should reduce the tax take by around €60M. Income taxes have probably held up to date thanks to Public Servants! As most jobs created in recent years and now being lost in the private sector were low paid, the actual tax loss is not as big as might be expected.

    The vast majority of the larger CT payers are multi-national firms, and while part of the decline in the first three months may be down to one large financial institution with a 31/3 year end, I don’t think that the movement in CT are overly influenced by domestic factors.

    The decline in VAT is likely to continue for a long time as the public is unable to continue borrowing for day to day living expenses and indeed must now begin to repair their personal balance sheets.

    There is also a third factor in relation to tax, which some people have not factored in – Arrears of tax are I understand going through the roof. I gather this is particularly the position in relation to fiduciary taxes, VAT & PAYE/PRSI payments. Many businesses are thieving the money deducted from customers and employees by failing to pay over the taxes deducted.

  3. Here are my predictions for April 8th:

    Basic tax rate to increase from 20% to between 21% and 23%
    Cigarettes up EUR 1 per 20
    Top tax rate to be betweem 48% to 49%
    Tax free allowance to be changed to between EUR 7500 to EUR 8000 per person
    Bag tax to go up 5 cent
    Beer to go up 10 cent
    Spirits to go up 10 cent
    Bin and waste charges up an extra $50 a year
    10 cent more tax per liter of petrol (on top of the existing tax of course!!)
    Diesel to go up 7 cent
    Bottom rate of Tax (goods and services), currently at 13.5% to increase to 15%
    Standard rate of goods and services (currently 21.5%) changed to 22%
    DIRT to go up 0.50%
    Capital Acquisitions Tax to go up 0.5%
    Capital Gains Tax to go up 0.50%
    Stamp duty to go up 0.5%
    VRT to go up by 1%
    A&E charges to go up EUR 10

    To come later this year:
    Ireland to lose the AAplus rating (it was AAA a day or two ago) and drop to Aplus within 2 years.
    Ireland to break 15% unemployment rate by the end of 2009 (that would be 623 417 people on the dole by this years end).
    The government *cough* say we will recover by 2012. However anyone looking at the books can plainly see it will be around 2015 (and that is being optimistic).

    It costs 54 Billion to run Ireland per year, the total tax take a year (right now) is 34 billion. It is obvious to a 4 year old we do not need to save 4.5 billion (or 6 billion depending who you ask), but *20 billion* (and typically they “forgot” a lot of people will leave Ireland and also they “forgot” the emigrants have gone home (Poland etc. In total approx 350,000). So it will be more like 24 billion. And thats just to be able to run the country.

    Strong potential for Anarchy in Ireland and probably early elections too.
    Criminals to have a field day as the gardai and similar public servants get reduced

    For 2010:
    Social Welfare payments to be reduced by approx 10%

    Ah well….a few days and we see how right i was (or wrong)

    I wonder what you think of my predications and or if you could add to them…hmm?

    At 29 years old I am already giving up on Ireland, I got a VISA to Austrailia

  4. @Niall: “Arrears of tax […] fiduciary taxes, VAT & PAYE/PRSI payments. Many businesses are thieving the money deducted from customers and employees by failing to pay over the taxes deducted.”

    I don’t know anything about PAYE and PRSI, but the VAT system seems to work on the basis of the government’s stealing money from me, by forcing me to pay to it VAT I have invoiced, whether or not I have received payment. So I’ve been giving the government free loans.

    And then some customers deduct withholding tax ….

    bjg

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