The other point is that the Government rolled out expensive cost of living measures in Budgets, to mitigate the effects of the increases in the cost of living.
If there wasn't a cost of living crisis, why did they do that?
From the previously linked Irish Times article:
To buy votes? I mean clearly electricity prices went through the roof so naturally they reacted to it.
The Government got away with some iron laws of economics here because we operate within a pan continental currency, have an interconnected supply chain and also because we had the Corporation Tax revenues to support it. In many respects this was the inverse of the Global Financial Crisis, whereby we were absolutely hammered because of our membership of the Euro and how different our economy was to the core economies. The fact that we were in a wider currency this time meant we could spend whilst the overall Euro Area had to deal with bringing down inflation.
Ireland outperformed basically everywhere on earth in response to the post COVID/Ukrainian inflation. We can see this by basically any economic and fiscal measure.
I would say the Government mitigated issues before they became a "crisis".
On the contrary. We have discussed this at length before on askaboutmoney.
People argue that we enter the top bracket relatively early, which is true. But the effective tax rate for low and middle earners is below average while for single people and higher earners it's about average.
These figures are a few years old, but I don't think that tax rates have increased in Ireland and reduced elsewhere to change the overall conclusion. But I am open to correction if anyone has more up to date figures.
The Irish Times did a good series with the Irish Tax Institute on this 2 years ago (I cannot link but its at "
Tax: how does Ireland compare with other countries?"
Clearly more elements need to be added into this but it is startling how little tax those at €25k pay. And bear in mind that this represents over 40% or 1.4m tax payers out of 3.4m. They pay less than 1% of our total income tax collected. And really we have close to 1m tax payers who pay less than
€50m combined out of €35bn.
This puts us at the uber progressive tax levels of Switzerland. You pay €4,000 more in tax in Germany at that level than in Ireland. Private health insurance is not worth €4k for the average person.
At around the median wage (of €50k) I think we come out close to par for what a social democratic country would expect, possibly a bit less. They have significantly more tax home than a Germany but about the same as Sweden. I think when you add up the quality of services and other stealth taxes that you'll find we are fairly in the middle, on balance.
At higher salaries, we are absolutely at the social democratic European levels of high tax.
The issue in Ireland is that long term housing costs have distorted the picture. I don't propose to go splashing enormous taxes on the lower paid at German levels, but I'd also make a strong argument that many in that bracket should be paying tax from an
equity perspective. I say equity perspective because unfortunately I don't think there is an awful lot of money to be raised here. When you compare to our Corporation Tax receipts, we are only touching the surface. It's the same thing with the Left's proposals for higher taxes on higher earners. What it will actually raise is not going actually do much at all given our current spending.
