Sir, – Cantillon’s number of the day (Business, February 27th), taken from Eurostat, is that at 20.3 the percentage of gross disposable income of Irish households that went to pay taxes on income and indirect taxes in 2015 was one of the lowest in the EU. Excluding Greece, where the burden is off the charts, the range is 17.6 per cent to 33.9 per cent and only two countries (Cyprus and the Czech Republic) rank below Ireland.
This suggests that there is significant scope for an increase in the tax burden on Irish households, which feeds into the current political debate here. But some further analysis is required to get a sense of why Ireland is an outlier.
The Eurostat report shows that low-income Irish households have one of the lowest tax burdens in the EU (only those in Malta have lower) while high-income Irish households have a tax burden which is very close to the highest percentage in the EU and higher than 14 of the other 20 member states for which data are available.
This is consistent with more recent figures from the Irish Tax Institute. In its 2019 pre-budget report it pointed out that an Irish worker earning €18,000 paid €480 in income taxes. The corresponding figures were €1,895 in the United Kingdom, €3,358 in Sweden, €3,886 in France and €4,679 in Germany. It is also consistent with successive OECD reports which show that Ireland has one of the most progressive personal tax systems among member states. In other words, high-income Irish households tend to pay more of their income in taxes than high-income households elsewhere.
Any debate on our income tax system and international comparisons should acknowledge the major difference between the income-tax systems of other high-income European countries and that of Ireland.
The difference is not that high-income earners pay lower taxes in Ireland – they don’t. Rather it is that those on lower incomes have an income-tax liability in these other European countries but not in Ireland.
The Revenue Commissioners estimate that 37 per cent of income earners or about one million tax units (this ignores those on State pensions and the long-term unemployed) did not pay income tax in 2018 while about 29 per cent did not pay the universal social charge which, of course, is now far from universal. – Yours, etc,
PAT O’BRIEN,
Rathmines,
Dublin 6.
Sir, – In its latest report, the Irish Business and Employers Confederation (“Ibec warns that Government may have underestimated corporation tax loss”, Business, February 27th) stated that we remain a rich country and should act like one.
We do. A new report from the Central Statistics Office (CSO) reveals prices in Ireland were 27 per cent above the EU average in 2018, the second highest in the EU after Denmark. – Yours, etc,
TOM COOPER,
Templeogue,
Dublin 6W.