Irish employers want large profits but in general pay low wages. The Dell workers who helped earned tens of millions in exports have no pensions and were forbidden to join a union. Their taxes paid for political extravagance and waste. We, as a society, are not indignant at government waste, nor indeed at the mess and cost of the politico-banking fiasco. That will haunt is for generations to come.

re your point 4 above

(4) abolish PRSI and levy relief on pension conts

why abolish PRSI relief on pension conts when we, as a matter of public policy, are trying to get people to fund for themselves in later life?

Am I not right in saying that the recent levies are on all income?
(PAYE income that is) and not merely income net of pension conts!

We will need to encourage more people to put aside more of their money to provide income for themselves in the future.

The “pay as you go” unfunded public sector pension bill and indeed state pension going forward is unsustainable.

Do you think your children will pay the taxes to fund your DB pension while only being entitled to a DC one themselves??

This needs to addressed as a matter of urgency and not put off until it blows up in our faces.

So what, tax Sean Quinn 99% of his income? Or even 99% on the top X% of his income? ”

Speaking for Danny, I doubt that Sean Quinn pays anything near 50% on his income. If we have a tax system with a top rate of 50%, we should at least ensure that it is actually applied. That would be fair.

“around 50% of the working population (c.700k people) pay less than 10% in effective tax, with a large proportion of these close to zero. Doesn’t this seem obscenly low? ”

Yes indeed. Maybe, we should have a tax system which is highly regressive so that the lowest paid have the highest tax rate. In addition, we should tax the old age pension at the standard rate, or better still, pay it net of tax!!!! The reality is that many people dont pay any/much tax because they have very low incomes.

I believe many people would agree with me, and presumably with VB, that having a country run by idiots or kleptocrats (or both) is a bad plan.

The current government’s proven ability to make a mess of a very promising economic situation makes destructive socialism seem almost attractive in comparison. Almost.

Some quick ways to broaden the tax base:

(1) abolish the PRSI exemption of 352pw
(2) reduce or abolish the PRSI-free allowance of 127pw
(3) abolish various small tax reliefs: waster charges, trade union fees
(4) abolish PRSI and levy relief on pension conts

Get every earner to pay PRSI on all income, to be seen as solidarity.

@ronan l. Agreed re MNCs

around 50% of the working population (c.700k people) pay less than 10% in effective tax, with a large proportion of these close to zero. Doesn’t this seem obscenly low? The goal has to be to broaden the entire tax base rather than simply try and tax the wealthier and more mobile people in our society.

“Surely a progressive tax system continues to tax people more as a % of their income as their income increases.”

So what, tax Sean Quinn 99% of his income? Or even 99% on the top X% of his income? The tax take has to stop at some stage surely, or are you suggesting a rather scary Marxist paradise?

#cases = 21,182
Average gross income = 463k
Average tax paid = 128k
Average ATR = 27.6%

This excludes PRSI (ceiling was about 50k in 2006) and the Health levy (2%, no ceiling).

I feel that these ATRs are still too low. If we raised 50k extra tax from these 21,182 cases, that’s 1bn extra revenue.

But I suppose the bigger argument is of course the competitiveness one. Any country where a multinational can’t pay someone more if they wanted to is unlikely to attract much in the way of FDI.

Hello VB!

Perhaps a max salary of 100k on all public servants, semi-states and private companies receiving government support. Or are we really worried that we would lose so much talent that these organisations would be run inefficiently!!

It is silly to call VB a Stalinist when the ordinary person in, and for generations to come must, foot the bill for the Nama debacle, caused by corporate greed, bad government policies and errant regulators. Direct and indirect taxation - which takes account of public service charges - must be factored in to what a person contributes towards the exchequer as a percentage of their annual earnings.

Since the PD conference in 1994 Mary Harney has called for a low wage economy. But Britain even with its low wage economy has suffered a major crisis because of the influence of the financial sector in political circles. The issue is not just taxation but bad fiscal policies that pretend to be good for the national economy but are not. Wealth needs to be spread fairly.

Perhaps a taxation rate that factored in how hard an individual worked for their wages would be a truly progessive system. The Irish public service is very unproductive and the pay of higher public officials is very high compared to international standards but that is not being addressed. Some people, usually the rich and influential, believe it is others that should pay tax but not them.

Since the PD conference in 1994 Mary Harney has called for a low wage economy. But Britain even with its low wage economy has suffered a major crisis because of the influence of the financial sector in political circles. The issue is not just taxation but bad fiscal policies that pretend to be good for the national economy but are not. Wealth needs to be spread fairly.

Perhaps a taxation rate that factored in how hard an individual worked for their wages would be a truly progessive system. The Irish public service is very unproductive and the pay of higher public officials is very high compared to international standards but that is not being addressed. Some people, usually the rich and influential, believe it is others that should pay tax but not them.

Me thinks you will be invited onto his show soon for a right good handbagging!!! I dont know if you would/should accept!!
But I would definitely watch it.

@ Ciaran Daly
I believe the gentleman was a member of the communist party.
Fair play to Vincent for providing for inclusive views.
I would love to see a clear articulation of ‘right’ wing views on any show. It seems like the Irish public cant digest such views, nor, most right wingers express themselves like Joe Higgins etc.

Al

Vinnie B also had a member of the socialist party of Ireland on a recent show. While I respect free speech I wonder if he will have other extremists on his show too, perhaps right wing fascists and racists so there will be a balance of extremist views!

On your three points:
1. Exactly. If you follow the red line, the system is extremely progressive at lower income levels (especially for singles and married with one spouse working). Progressivicity falls off at higher incomes.
2. Agreed. Net pay of 415 a week is a lot less than net 3,400 a week.
3. The chart includes PRSI and levies.

Your chart would seem to suggest that the ‘progressive’ nature of taxes taper off at the €80-100k mark. Surely a progressive tax system continues to tax people more as a % of their income as their income increases.

I revert to my first point; paying 17% on 500+ a week is a lot tougher than paying 32% on €5000 a week.

That said, I do think up to date figures with PRSI and the new levies included need to be sought before any real conclusion can be made.

In general Fundamentalist opinionated cranks who love the sound of their own voice are best avoided. A fundamentalist cannot be reconciled with the truth.

Point taken, avoidance is legal, evasion is illegal etc. My apologies for my mix up of words etc.

Your second point about “Social Returns” on exemptions being higher thant actual tax paid is a more complex issue but still a very important one. There is a danger that Irish society will throw the baby out with the bathwater etc. We can’t get into a situation where all tax avoidance schemes are bad / evil with out a proper study of all tax emptions etc. It is possible that some exemptions have a higher social return than others, no doubt there will be a review of all avoidance measures, perhaps a weighting factor applied.

Tax avoidance is a cat and mouse game, but the Revenue are slowly getting the upper hand, it just takes time.

In relation to tax relief on pension contribution. I would not view tax relief on pension contributions as avoidance. I would view it as tax deferrment. When you draw down your pension, you still have to pay tax on it. Instead of paying tax now, you pay it in 20 years time etc.

In addition there is a benefit to the state, as the state does not have to support you in your old age as you have a private pension fund which supports yourself. I am open to correction, but if my memory is right the state is legally bound to support its citizens with regard to pensions. Even if you have not made any contributions, either private or public.

@ Margaret Hurley,

Indeed there was a time not too long ago when tax evasion was something to be proud of and encouraged etc. But that atmosphere has changed over the last 10 to 15 years.

Technically I would agree with you in getting down to “brass tax”, if everybody is compliant then the tax rates should come down etc etc.

But we both know that is not the case. There has to be efficient spending of tax payers money. That is where the real nub of the matter lies.

How many times have we witnessed several scandals, in which little or know accountability / responsibility was shown. For example if I was a doctor or a Garda, where in the course of my work I was incompetant corrupt or just a sick butcher. Eventually after 10 years my incompetance becomes public and I am forced to resign. Despite the fact that I was paid by the state to do a job (which I did not do), I recieve a pension by the state for the job done (which was not done well) and a golden handshake. In addition the state has to payout compensation for the mess that I made. Where is the justice in that? We are only encouraging people to be incompetant, not to be competant.

The state must take its responsibility of spending its taxpayers money wisely. Unfortunately it needs to up its game in that regard.

@ Simpleton,

If you read my statement at the end of it I said “because others did it”.

Joe and Joan don’t open a non resident account because Jack and Jill up the road have one. People tend to try and minimise their taxes because it would improve their standard of living at a later date, i.e. personal reasons more than group herd mentality etc.

But I take your point that in the past tax evasion was more common.

Perhaps with the total abolition of cash in a society will we truly overcome tax evasion. That day may be coming sooner than we think.

As for his constant harping on about “fairness and equality” neither he nor most of the people on the left would recognize them if they leaped up and hit him in the chops.

Running some quick (and crude) calculations suggests that something like a 20% flat tax across the board would yield enough to run the country, with only exemptions for people on actually low incomes. Vincent would just hate that kind of fairness and equality, whereas many of the ex-communist countries started with flat tax systems once they became free.

BTW, if you recall Ronan Lyon’s analysis which showed a 4% effective tax rate for median earners in Ireland, it included the CB and ECS offsets. These have been reduced substantially and I haven’t seen any analysis that takes that into account.

Also, a high VAT rate and high excise duties on liquor and tobacco are not exactly progressive either. There are good reasons for the latter but that is a hidden non-progressive cost. And I’m sure you are familiar with the research literature on the hidden financial costs for lower income groups - can’t buy economy size packs and so on.

This chart shows the effective and marginal tax rates (combining income tax, the 2 levies and PRSI) for taxable incomes from zero to a million in 10k jumps for 2009. The only credits taken into account related to marital status so the rates depicted at every income level are maximums.

http://www.planware.org/briansblog/resources/taxratechart.pdf

Notable features include:
- the erratic growth in the overall marginal rate before it settles down at 52%.
- the rapidity of the increase in overall effective rate from €20k up to €80k. The overall rate tapers off thereafter and effectively flatlines at about €500k.
- the difference in effective rates for singles, married (one income) and married (dual income) particularly at low incomes.

Note that the overall rates takes account of the mix of single and married income tax payers at each income step based on Revenue data for 2005 - this wouldn’t have changed much since then.