Is Ireland a low taxation economy?

G

Geoffreyod

Guest
The government claims it is!
I'm not sure it is.

Anyone know of anywhere online where you can quickly compare rates of taxation in the Eurozone.
I'm not concerned about Scandinavia or Switzerland where they have decided to do their own thing.

I'm not looking for info. about taxation for businesses but for the individual.
 
overall burden of tax

First of all, remember that people pay all taxes, sure who else is there in the country to pay them? Companies pay corporation tax, but really it is the shareholders, customers and/or workers of the company who bear this burden.

Sweden, tax = approx 55% of national income. This is the highest in the world. Note that Ireland used to have such high taxation.

EU average = approx 45% of national income.

Britain = approx 40%.

Ireland = under 35%, maybe close to 30% of national income

Ireland has the lowest burden of tax in the EU. Income tax and especially PRSI are low here, though indirect taxes are higher. Low property taxes.

Contango10
 
Tax values

How can Britain be 40% when highest rate of income tax in Britain is 40%.

Property taxes- I remember watching a program on BBC2 where two guys were trying to sell their house for in excess of £500000(note not Euro) but nobody would offer more than that because that was the point at which stamp duty increased from 3% to 4%.
Don't we hit higher rates of stamp duty at lower price levels and don't we hit 42% income tax earlier than most other countries.
 
Re: Tax values

Are we not talking of the net impact of all unavoidable direct taxation and related deductions - e.g. in Ireland this would be tax and PRSI/health levy, in Britain it would be tax and social insurance and so on? It seems to be very difficult to find any summary surveys dealing specifically with the net impact of direct personal taxes on take home pay in different countries but the surveys that cover both personal and corporate tax certainly seem to identify Ireland as a "low tax" country.
 
Re: overall burden of tax

Contango,

do your figures include the total tax burden, i.e. indirect taxes e.g. VAT, Bin charges, fuel levies etc. Or are they just direct (income) tax.

It's be useful to know the income the government generates in total per capita in each country. Then we could accurately compare the kind of service they provide.

-Rd
 
take home pay

Without complicating matters, I like to know what take home pay is after tax for an average Joe on an average(??) salary of €32,000 without taking into account additional tax credits.

This would ignore that your €, once you've earned it, buys less here than in practically any other country in Europe.
 
Re: overall burden of tax

Geoffreyod and Daltonr,

my figures, which are approx, refer to the sum of all taxes, i.e.

direct (= income plus corporation)
indirect (= VAT plus duties)
capital taxes
property taxes

I can't swear that they are just central govt, or if they are central plus local govt. Social Insurance (PRSI) is very likely included in these figures.

I could get tons of more precise data, e.g. as published by the ESRI, etc. I might, depends on the mood I'm in.

As to daltonr's point about per capita tax revenue, I have never seen that sort of data.

As to the earlier point: how can the UK govt collect 40% of national income in tax, while the top income tax rate is just 40%.

Simple: they collect loads of other taxes, like fuel duty, VAT, National Insurance, Capital taxes.

Here's an example: say I earn 36k, pay 18% of my income in direct tax. I actually pay more, when VAT and excise duty is added (difficult to calculate). So overall, the Irish Govt take 30% of total income, though just 18% of my gross wage.

Contango10
 
hit 42% tax rate too early

Geoffreyod,

excellent point.

One of the big problems in the Irish tax system is not the overall burden of tax, which is low, but the fact that average people on average wages reach the 42% tax rate too early.

At 28k, for a single person. The gross average industrial wage is now over 28k.

That is the killer.

Solution: more rates. UK has 3, USA has 6 rates.

i.e. 20%, then 30%, then 40%, then maybe 50%. You would only hit the 40% at, say, 40k.
 
low rate tax country for who?

So does that mean that when FF and PD blow their own trumpet about this being a low tax economy and ask us for our votes that we should say "perhaps, it is but what's that got to do with anything".
Does "low tax economy" need to be qualified as actually a "very low tax economy for business and relatively high tax economy if you work for a living which when aggregated is a low tax economy".
Seems to me that low tax economy is a governmental marketing type term which when examined means what it means but people psychologically read other more favourable meanings into it.
 
Re: take home pay

Without complicating matters, I like to know what take home pay is after tax for an average Joe on an average(??) salary of €32,000 without taking into account additional tax credits.
Click to expand...

€25,624.08 p.a. (or €2,135.34 p.m.) after tax and PRSI according to Karl Grabe's tax calculator - i.e. the direct personal tax (and PRSI/health levy) take is 20%.
 
average vs. marginal

Well, what I was getting it is that even though my average income tax = 18%, I pay 42% at the margin on extra income.

So overall taxes are low. But if you get a promotion, do overtime, extra income, etc., you are hit at 42% plus PRSI.

C10
 
Re: take home pay

the direct personal tax (and PRSI/health levy) take is 20%
Click to expand...

there's a similar (ish) calculator on taxcentral.co.uk which shows that the equivalent UK tax (and national insurance) take on £22,500 (c. €32,000) is about 25% - the NI amount is the real killer at almost 9% with very few reliefs or allowances. Ireland's direct taxes are very low IMHO and could do with being upped substantially to invest in some decent services (provided we could trust the politicians to do the right thing ......... but I think we've seen this debate somewhere else on AAM already)
 
Re: take home pay

Well, what I was getting it is that even though my average income tax = 18%, I pay 42% at the margin on extra income.
Click to expand...

Contango10 - I was simply replying directly to Geoffreyod's specific query just in case there's any confusion.
 
concur with Alex's figures

Used Prudential UK taxable income calculator and Karl Grabe's calculator

about 20% here at 32000.
about 25% in UK.


Put salary in at 40000(£28120) and
both UK and Ireland had risen to about 26%.
 
bit slow

0,

I was actually replying to geoffreyod, but as I am a bit slow at typing, your reply was in quicker, so it appeared I was replying to you.

Of course, that will probably happen again now.

Contango10
 
Re: bit slow

No problem! ;)
 
low tax

It depends how you look at it.Tax dodging is some sort of culture here.They have the lowest control rate on bookkeeping according to the department of finance.No where in the EU you see children selling smuggled cigarettes,unlike Dublin.Diesel laundering is not worth the legal trouble somewhere else in the EU.Untagged (unaccounted!)cattle is UNTHINKABLE for
continental farmers,their colleges would set the shed alight. E.t.c....
 
Re: low tax

OK, here's a comparison between UK and Ireland.
As best as I can figure it.

Single Male, Gross Salary €40,000,
No pension or other reliefs.

UK
Gross £40,000
Allowances £4615
Monthly Tax £702
Monthly PRSI £248

Monthly Take Home £3333 - £702 - £248 = £2383


Ireland
Gross €40,000
Credits €2560
Monthly Tax €674
Monthly PRSI €166

Monthly Take Home €3333 - 674 - 166 = €2493


So we are better off to the tune of €110.
Council tax in the UK puts us further in the lead. I don't know the rates, but I checked with one person who's paying roughly €1200.

However they get their bins collected for that :) , and a big chuck of the money goes to paying for local police. I don't know how their crime rates compare.

From there onwards however the UK quickly overtakes us,

They pay much lower VRT and road tax, but higher tax on fuel.
(tax on use not ownership)

Top rate of VAT is only 17.5% compared with 21% here.
Lower rate is 5% compared with (12.5% or 13.5% here anyone know?)

BIK Rate is 20%, ours is 30%

Stamp duty in the UK on a 100K house is 1% or £1000
on a 1 million house it's 4%.

that's the tax situation, I think on balance it's probably too close to call. In terms of direct taxes, income and local taxes, we probably shade it, but you'd need to compare the service we get.

In terms of other taxes VAT, Stamp Duties, etc. The UK kicks our ass. And let's be honest, these are the regressive taxes that hit lower earners harder.

The real difference however is in the cost of day to day items in shops. Some of this is down to lower VAT but not all. Even though the exchange rate makes a £7 STG purchase cost €10, in all liklihood that's still cheaper than you'll get it for over here. Argos is 30% cheaper in the UK than Ireland.

That £7 purchase could well cost you €13 or €14 in Ireland.

Car insurance is much cheaper (but they still think it's expensive). I got a quote more then 50% cheaper in the UK than Ireland.

You can live in the equivalent of Brighton which in distance terms is Carlow or Kilkenny and commute into the capital by train. Trains leave every hour or so, and they leave early enough to get to work.

Public transport in the city and even intercity is such that you don't need a car at all. In fact you are better off without one.

what the hell am I still doing here!?!?!

I'm off!

-Rd
 
Re: low tax

And another thing...

Even though the UK has a CGT top rate of 40% their system is arguably more beneficial to most small share holders with CGT charged as follows:

- First £7,900 of any gain charged at 0% (personal annual allowance)
- Next £1,960 charged at 10%
- Next £28,540 charged at 20%
- Balance charged at 40%

In Ireland it's

- First €1,270 charged at 0%
- Balance charged at 20%
 
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