Inequities in the tax system

N

N0elC

Guest
I've just read ClubMan's answer in the Tax section to a query about <a href=http://pub46.ezboard.com/faskaboutmoneyfrm5.showMessage?topicID=348.topic>Tax relief at source for someone who is tax exempt </a>.

I find this tax policy very strange.

It seems that people availing of our myriad of tax reliefs and exemptions can still obtain, what is effectively a 20% subsidy on their mortgage and medical insurance paid for by the hard pressed taxpayer. :no

I understand that administratively, it is much simpler for the revenue to give relief at source, but it seems that the Revenue are just giving away taxes that they can't be bothered to collect, while the rest of us pay through the nose.

:mad

Here endeth the rant !

;)
 
<!--EZCODE BOLD START--> I find this tax policy very strange.<!--EZCODE BOLD END-->

Why so? Surely people who are earning so little that they are not liable for income tax are the very people who need the benefit of such credits?
 
I think Noel's point refers to the paradox of high-earners whose earnings derive from sources that are exempt from income tax - artists and racehorse breeders to name but two groups - getting tax relief even though they don't pay tax.

I too find it bizarre that the high-rollers in these categories are getting their mortgage interest and VHI/BUPA subsidised by the rest of us.
 
Surely the substantive problem is with granting total income tax exemption to selected groups rather than this specific nuance of the tax credit system? Other than these income tax exempt groups I would have thought that the rich/super rich who don't pay income tax would be hit by capital taxes instead?
 
Inequity in the tax system

Clubman is right. Most non-taxpayers are non-taxpayers because they have little or no income. Few of these will have a mortgage, and the cost of giving them mortgage interest relief even though they pay no tax cannot be very great.

The anomaly here is not that someone entitled to the artist's exemption gets mortgage interest relief, but that he pays no tax, regardless of how much he earns from his art. (Most artists don't earn a lot, I grant you, and so wouldn't pay much tax anyway.)

It's an anomaly we're fairly proud of in this country. It proves we're cultured, and so dispenses with the need to have a properly-funded public art programme. So in reality it saves public money overall!
 
Re: Inequity in the tax system

Just out of interest, other than artists, what kinds of people may qualify for income tax exemption and, in general, do they pay other forms of tax (e.g. capital taxes)? I know the last Budget/Finance Act introduced certain exemptions for full time sports people. Is it really the case that racehorse breeders may be exempt!?!

US - I'm not sure, but I suspect you're being slightly ironic/sarcastic in that last paragraph!? ;)
 
Re: Inequity in the tax system

As the person who asked the question in the Tax forum... and the person who is exempt I too find it odd that I may get tax relief on a mortgage. I can also understand why people find it frustrating that certain groups are exempt, but consider this.

Most artists/writers have a limited career span. Therefore they can earn a lot of money in a relatively short period of time... Living in the UK as I do at the moment I end up after fees are paid to my agent, pension fund, writers guild, Vat and Tax man with about 33pence in every pound I earn. Please don't feel sorry for me yet :)

But where the system is intransigent is when you have a good year followed by a bad year... as often will happen. Suddenly you are in a position where you may lose your house, car and credit rating. That's why I'm moving back to Ireland. To get rid of the cycle of doing well followed by virtual bankruptcy.

The benefits of this as far as the Irish public are concerned are increased property prices [of course this is also a draw back] and a culture influx. It's put places like Dalkey on the map. [I can't afford Dublin BTW, moving to Mayo] The other bonus is of course that local business thrive because the well healed popstar, film maker, artist spends his Euros on their services.

At the end of the day if the exemption didn't exist many of these now affluent communities would not exist... It doesn't make it any fairer but I guess it does make sense.
 
Re: Inequity in the tax system

<!--EZCODE BOLD START--> Most artists/writers have a limited career span.<!--EZCODE BOLD END-->

As artists/writers - true. But what's to stop them taking up another line of work when the muse/interest disappears? ;)
 
Re: Inequity in the tax system

As artists/writers - true. But what's to stop them taking up another line of work when the muse/interest disappears?

> Then they would pay Tax on that income.... Only the proceeds from the Artistic work are Tax Deductable. So for example I'm an Actor as well... But actor's are not exempt and therefore if I make a movie I pay tax on that at normal rates.
 
Re: Inequity in the tax system

I think the point being made was that your point about limited lifespan of the artistic career being justification for tax-exempt status isn't valid if you can just switch straight into a 'normal' job afterwards rather than retiring from the workplace altogether (with your tax-free dosh to tide you over).
 
Re: Inequity in the tax system

Hopefully my muse will stay with me then. :)
 
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