rip-off/how much tax do we pay?

[casiopea]

For those that do think that it's a rip-off what do expect to be done and by whom? Price caps on mixed grills imposed by the Government and supervised by some statutory agency? ..... High price and not value for money - maybe. Rip-off - no.

Ive read all the Eddie Hobbs threads with interest. I think people are getting too caught up in the definition of rip-off and the mixed grill example. I agree, the price of a first class train ticket and a mixed grill is not an example of a rip-off. But that is not what this series is about. The rip-off, is the difference in your pay check from the top to the bottom, ie the tax your paying. And in fairness to Eddie, I think he's been quite clear about that.

what do expect to be done and by whom?

There are things the consumer can do other than moaning. But, in my opinion, not much. Yes, we can shop around for better value. Yes, we can send nappies to Michael Martin. You can even do what I did and move to a country with a lower taxation (I pay 18% which is a stark difference to 42%) but at the end of the day this problem has to be addressed by the Irish Government.

At the very least Eddie has more people thinking and talking about this.

cas

 

[ClubMan]

Re: Semantics - different definitions and interpretations

You can even do what I did and move to a country with a lower taxation (I pay 18% which is a stark difference to 42%) but at the end of the day this problem has to be addressed by the Irish Government.

Myself and my wife are paying 17% tax and PRSI/health levy on our joint income. Are you sure that you would not be better off in Ireland? This is the sort of misrepresentation of the facts that annoys me when the issue of "rip-off Ireland" is discussed. The fact that our top tax rate is 42% does not mean that people are paying 42% of their gross income due to the fact that we have a standard rate band, tax credits, allowances etc. Don't get me wrong I'd love to pay even less tax and have better services provided by the Government/state but to claim that the tax burden is necessarily onerous just because our top tax rate is 42% does not stand up in my opinion and experience.

Taking the definitions above regarding rip-offs, this is an article I've seen which I think illustrates that we are living in a "Ripoff Ireland", even under the definitions of ripoff sponsored by clubman and brendan.

Summary of Overcharging in Ireland

That's a very interesting article and supports my assertion that there are indeed real rip-offs in operation and that using a scatter gun approach and blaming all of our ills on a a nebulous and largely meaningless concept/catchphrase such as "rip-off Ireland" deflects from identifying these real rip-offs and taking steps to rectify them.

I agree, nothing should be done by anyone other than the consumer voting with his/her feet. There is no other solution other than that which you suggest.

Actually I don't think that this is a complete solution for real rip-offs which would involve, for example, regulation and oversight by statutory and consumer bodies where applicable but it is certainly a good start for consumers to shop around and exercise their own discretion when choosing whether or not to make purchases etc. The problem is that many supposed "rip-offs" fall into the category of people seeing somethat they want, buying it regardless of price/value and then complaining after the fact that they were ripped off when they were obviously not.

 

[casiopea]

Re: Semantics - different definitions and interpretations

Are you sure that you would not be better off in Ireland? This is the sort of misrepresentation of the facts that annoys me when the issue of "rip-off Ireland" is discussed.

Hi Clubman,
Yes, Im sure and Im qualified to make that comparison. Ive lived in both Ireland and switzerland. Ive paid tax both countries. Im not as up to dates on all tax terms as you are, but simply, in ireland between Gross and Net income I was paying 42% in Switzerland its 18%. Im talking about the total amount taken from both pay checks. This is not misrepresentation....its fact.

The fact that our top tax rate is 42% does not mean that people are paying 42% of their gross income due to the fact that we have a standard rate band, tax credits, allowances etc.

I started working 10 years ago at the age of 22 in the IT industry. I started on a graduate salary. After my first pay rise (approximately at the end of the first year) I was in the top tax band of 42% (it was a little bit higher then even). Yes we do have tax bands, credits, allowances, but still at 23 I was paying tax at the top tax rate.

 

[ubiquitous]

Re: Different definitions and interpretations of "rip-off"

Casiopea, Just because you are in the 42% tax band doesn't mean that you are paying 42% of your income in tax.

A mythical single worker earning €30,000 on PAYE in 2004 (around the average industrial wage), with standard personal & employee credits) would have paid €3,880 in tax that year, or 12.9% of their income. A similar worker earning €40,000 that year would have paid €8,080, or 20.2% of their income. This ignores the various other tax credits and exemptions (not to mention incentives such as SSIAs) that are available to workers in this country.

 

[ClubMan]

Re: Semantics - different definitions and interpretations

Yes, Im sure and Im qualified to make that comparison. Ive lived in both Ireland and switzerland. Ive paid tax both countries. Im not as up to dates on all tax terms as you are, but simply, in ireland between Gross and Net income I was paying 42% in Switzerland its 18%. Im talking about the total amount taken from both pay checks. This is not misrepresentation....its fact.

I am talking about the bottom line too and although I am on 42%/PRSI class A1 and my wife is on 20%/PRSI class A0 the total deductions in respect of tax and PRSI/health levy come to 17% in our case for 2004 (I haven't calculated them for this year). Obviously different people have different individual circumstances but in this case it would seem that we are better off than you in terms of statutory payroll deductions regardless of how the tax bands in the different countries compare.

I started working 10 years ago at the age of 22 in the IT industry. I started on a graduate salary. After my first pay rise (approximately at the end of the first year) I was in the top tax band of 42% (it was a little bit higher then even). Yes we do have tax bands, credits, allowances, but still at 23 I was paying tax at the top tax rate.

Yes - but you were not paying 42% on all of your income. You have to look at the "net tax" (i.e. gross tax, including standard rate and high rate tax, less credits and allowances) to get a better comparative figure. Just saying that the high rate is 42% and people enter it on a particular salary means nothing in itself.

As I said in the other thread it would be interesting if others posted a similar analysis of their situation as I did to see how much they actually pay in direct taxes/deductions and to clarify the fact that the headline numbers (e.g. 42%) don't mean an awful lot when you crunch the numbers.

 

[CCOVICH]

Re: Different definitions and interpretations of "rip-off"

My effective tax rate is 33%. This takes into account reliefs such as VHI, Travel Pass and Pension, but also the associated costs. So, it's actually probably lower than 33%. No-one will have and effective tax rate of 42% as long as we are all entitled to the standard rate up to some point, right?

 

[ubiquitous]

Re: Different definitions and interpretations of "rip-off"

21.9% in tax (excluding prsi) combined for myself and my spouse (both on the marginal rate of 42%) in 2004.

 

[ClubMan]

Re: Different definitions and interpretations of "rip-off"

No-one will have and effective tax rate of 42% as long as we are all entitled to the standard rate up to some point, right?

Yes - not to mention tax free or standard rated tax credits. [broken link removed] is useful for estimating one's annual "net" tax/PRSI bill and might be an eye opener for those who automatically assume that they pay over the odds on tax. Especially when, judging by some of the queries here on AAM and elsewhere, many people don't seem to even know what they are earning gross/net, paying in deductions, entitled to in terms of reliefs etc. Obviously how that tax is eventually spent is also relevant but I'm just dealing with the bottom line here.

 

[casiopea]

Re: Different definitions and interpretations of "rip-off"

I do appreciate that being in the 42% tax band does not mean 42% of my income (in ireland) gets deducted in tax.
I also appreciate that I really need to compare my P60 and my swiss P60 equivalent to establish real savings. It would be an interesting exercise. I know Im making substantial savings here.

As I said my example was "simply put". I didnt include mortgage relief and childcare benefits (I dont have children but for the sake of argument) or relief on charitable donations in either country, for the sake of simplicity. They all also exist here.

Im not Ireland bashing. I was simply trying to answer ClubMans earlier question of "what should be done and by who".

Like I said, there is only so much as a consumer we can do. This is up to the Irish Government to address.

 

[ClubMan]

Re: Different definitions and interpretations of "rip-off"

I do appreciate that being in the 42% tax band does not mean 42% of my income (in ireland) gets deducted in tax.
I also appreciate that I really need to compare my P60 and my swiss P60 equivalent to establish real savings. It would be an interesting exercise. I know Im making substantial savings here.

Maybe you could present the figures at some point so that we could gauge the savings (on statutory payroll deductions such as tax and social insurance first of all) when you get a chance?

As I said my example was "simply put". I didnt include mortgage relief and childcare benefits (I dont have children but for the sake of argument) or relief on charitable donations in either country, for the sake of simplicity. They all also exist here.

A second step would be to consider indirect taxes and reliefs. A third step might be to consider the state services to which people are entitled via the taxes and social insurance that they pay. Obviously the more that gets included and the more disparate the nature of the systems in different countries/societies the more difficult it is to make valid comparisons.

Im not Ireland bashing. I was simply trying to answer ClubMans earlier question of "what should be done and by who".

Fair enough - I was just trying to verify that your claim that you are better off in tax terms in correct. If/when you post the details mentioned above we can judge this objectively.

Like I said, there is only so much as a consumer we can do. This is up to the Irish Government to address.

Address what? You seem to assume a priori that there is some problem to be addressed here. Can you state what specifically you believe that it is? If it is one of high taxation (in particular with respect to Switzerland) then I don't think that that case has been proven.

 

[sherib]

Re: Different definitions and interpretations of "rip-off"

Tax is always an emotive issue but what gets to me is the inequality of the distribution of the tax burden. If it was OK to have top tax rates for PAYE workers (on relatively low incomes) up to 70%+ when times were bad, why is it now OK to tax the highest earners the same as low or middle income earners?

Among the reasons why prices are high is because there are so many people with sizeable net incomes to whom such prices are not a burden. And I'm not referring to dinners in Shanahan's or Thorntons. The cost of food, energy, transport, clothing, phone services, health insurance and all the other basics are not discretionary and eat up a significantly greater proportion of a low to middle income worker's net income.

It is quite disgraceful to read in another forum that a single parent is only €10 a week better off by working full time rather than fall back on state support. Trying to be helpful, posters have indicated the multiplicity of state supports that may be available to this person including a Doctor only Medical Card. She would still have to pay up to ~€80/month for prescription charges. I would ask why is it made so difficult for such a person to obtain these benefits? It has been well publicised that some very high earners pay minimal tax simply because they can afford to pay Accountants to reduce their tax liability and to avail of perfectly legal tax avoidance schemes.

Our Taoiseach, Bertie Ahern, has already signalled that there will be no more tax cuts. He could widen the tax bands so that fewer people reach the 42% rate or, perish the thought, introduce a tax rate of say 55% on incomes above €100,000. I have no confidence either will happen. With living costs rising almost by the day, in particular fuel which impinges on everything, increasing discontent is on the horizon.

 

[casiopea]

Re: Different definitions and interpretations of "rip-off"

Maybe you could present the figures at some point so that we could gauge the savings (on statutory payroll deductions such as tax and social insurance first of all) when you get a chance?

I will do. In fact Ill probably need your help to interpret it(!) My P60 is in ireland and it will be 6 weeks before Im back again, but Ill ressurrect this thread and do a comparison between my 2003 p60 and my 2004 swiss p60. I stayed in the same job with the same company during this transition so it should be a relatively fair comparison.

Address what? You seem to assume a priori that there is some problem to be addressed here. Can you state what specifically you believe that it is?

Specifically: "The Rip-Off". Or whatever you want to call it. My original point, we got sidetracked on casiopeas taxes, was:

I think people are getting too caught up in the definition of rip-off and the mixed grill example. I agree, the price of a first class train ticket and a mixed grill is not an example of a rip-off. But that is not what this series is about. The rip-off, is the difference in your pay check from the top to the bottom, ie the tax your paying. And in fairness to Eddie, I think he's been quite clear about that....
.....There are things the consumer can do other than moaning. But, in my opinion, not much. Yes, we can shop around for better value. Yes, we can send nappies to Michael Martin. You can even do what I did and move to a country with a lower taxation (I pay 18% which is a stark difference to 42%) but at the end of the day this problem has to be addressed by the Irish Government.

Address what?
Rip-Off might be a wrong or a right word for it, it doesnt matter, we're only being pedantic. What the government needs to address whether this is amount is too high and most importantly how the money is being spent.

I think this is what Eddie is trying to achieve with this program and I think this is a very very good thing.

 

[ClubMan]

Re: Different definitions and interpretations of "rip-off"

Tax is always an emotive issue

I think that there has been a refreshing lack of emotion on the issue so far in this thread.

but what gets to me is the inequality of the distribution of the tax burden.

Not being smart but can you point to figures that illustrate this alleged inequality?

If it was OK to have top tax rates for PAYE workers (on relatively low incomes) up to 70%+ when times were bad, why is it now OK to tax the highest earners the same as low or middle income earners?

Surely this suggests that the tax burden is actually more equally distributed now? Was the top tax rate ever 70%+? I think remember top tax rates in the 50-60% but that was it. Maybe it was before my time? Once again just looking at the headline tax rates and bands does not really tell us much because of other factors.

The cost of food, energy, transport, clothing, phone services, health insurance and all the other basics are not discretionary and eat up a significantly greater proportion of a low to middle income worker's net income.

There is a wide variety of sources for such goods and services and a wid variety of prices that can be paid. This is definitely an area where people can shop around for suitable value and prices to suit their needs and pockets. If you think that there is a problem in this area then what do you suggest? More deregulation? Price caps? Something else?

It is quite disgraceful to read in another forum that a single parent is only €10 a week better off by working full time rather than fall back on state support. Trying to be helpful, posters have indicated the multiplicity of state supports that may be available to this person including a Doctor only Medical Card. She would still have to pay up to ~€80/month for prescription charges. I would ask why is it made so difficult for such a person to obtain these benefits?

...

Our Taoiseach, Bertie Ahern, has already signalled that there will be no more tax cuts. He could widen the tax bands so that fewer people reach the 42% rate or, perish the thought, introduce a tax rate of say 55% on incomes above €100,000. I have no confidence either will happen. With living costs rising almost by the day, in particular fuel which impinges on everything, increasing discontent is on the horizon.

You seem to be contradicting yourself here - bemoaning the alleged difficulty that some people have in qualifying for or claiming certain benefits while also bemoaning the lack of further tax cuts. Surely there are trade offs here and lower taxation will impact somewhere else - such as in terms of state benefits?

It might be more constructive if you could pinpoint specific examples (e.g. specific benefits that are hard to claim or qualify for) rather than taking about generalities.

 

[ClubMan]

Re: Different definitions and interpretations of "rip-off"

I will do. In fact Ill probably need your help to interpret it(!) My P60 is in ireland and it will be 6 weeks before Im back again, but Ill ressurrect this thread and do a comparison between my 2003 p60 and my 2004 swiss p60. I stayed in the same job with the same company during this transition so it should be a relatively fair comparison.

If you are unable to interpret your P60 then how can you honestly say that you are better off in terms of statutory payroll deductions in Switzerland compared to Ireland!? It'll be interesting to see the figures when you get a chance to retrieve and post them.

Specifically: "The Rip-Off". Or whatever you want to call it. My original point, we got sidetracked on casiopeas taxes, was:

But WHAT rip-off? Talking generall about "rip-off Ireland" is meaningless. We need to deal with specifics here to make any headway.

Rip-Off might be a wrong or a right word for it, it doesnt matter, we're only being pedantic. What the government needs to address whether this is amount is too high and most importantly how the money is being spent.

Trying to get to the bottom of what we're talking about is not mere pedantry or semantics. I don't understand what you mean by "What the government needs to address whether this is amount is too high...". You seem to concede that it's not established objectively that the tax burden is too onerous but yet you seem to assume a priori that we are being ripped off in this respect. I don't get it.

I think this is what Eddie is trying to achieve with this program and I think this is a very very good thing.

As I've said before I'm all for idenfiying and tackling the real rip-offs (such as some of those listed in the link posted earlier on) and raising consumer awareness but I don't agree that we have a pervasive "rip-off" culture/environment that impinges on most or all walks of life.

 

[ubiquitous]

Re: Different definitions and interpretations of "rip-off"

The tax take in this country may look high, but it is unlikely to be significantly higher than other countries as the internationally accepted wisdom is that the comparitively low-tax policies pursued in this economy in the past 10 years or so has been one of the major factors driving our high economic growth rates and the surge in inward investment. Maybe this accepted wisdom is wrong, but if it is none of our leading economic experts (on either side of the ideological divide) have disputed it.

In relation to Switzerland, my own uninformed understanding is that the economies of the major contintential powers (France, Germany etc) were performing poorly due to the combination of high tax and social insurance charges on employment. Maybe Switzerland has escaped this phenomenon? If their tax rates are lower than Ireland, you would imagine that the country would be a magnet for inward investment. Maybe they can afford to do without the likes of the Intels and Dells of this world.

 

[CCOVICH]

Re: Different definitions and interpretations of "rip-off"

Can anyone go live in Switzerland? What are the indirect taxes like there?

 

[casiopea]

Re: Different definitions and interpretations of "rip-off"

If you are unable to interpret your P60 then how can you honestly say that you are better off in terms of statutory payroll deductions in Switzerland compared to Ireland!?

I was joking, being disparging about my financial knowledge and paying you a compliment on yours. I can read my p60.

Ive tried to be as clear as I can be. So I think Im wasting both of our time by ping-pong replying. Maybe my english isnt as good as it used to be after all these years abroad (<- thats also a joke).

But WHAT rip-off? Talking generall about "rip-off Ireland" is meaningless.

ClubMan, we are in complete agreement. Im trying to get away from the term rip-off, stupid examples like mix grills and oxford dict. definitions of "rip-off".

The essence of my point is that how tax money is spent and, from that, if these taxes are too high needs to be looked at by the Irish Government.

Im off now. It was a pleasure, as always, debating with you.

Cas.

 

[casiopea]

Re: Different definitions and interpretations of "rip-off"

Can anyone go live in Switzerland? What are the indirect taxes like there?

Certainly anyone working in finance, IT, business can apply for a position and be granted a B-Visa.

Again, Im not ireland bashing, Im not saying moving to Switzerland is a solution (!!!) Interestingly there is another frequent poster here called delgirl who like me is irish and like me is married to a swiss man and theyve chosen to live in Ireland.

 

[CCOVICH]

Re: Different definitions and interpretations of "rip-off"

I'm not suggesting that you're Ireland bashing, and certainly don't want to give that impression . Was just asking those questions out of interest.

 

[sherib]

Re: Different definitions and interpretations of "rip-off"

Originally posted by casiopea
Im trying to get away from the term rip-off, stupid examples like mix grills and oxford dict. definitions of "rip-off"....Maybe my english isnt as good as it used to be.

That's why dictionaries are a useful tool Precision of definition allows everyone to sing off the same hymn sheet. Rational debate is precluded when some are speaking about oranges, more about apples and a few about lemons.

If there isn't overcharging in Ireland, why have tourism returns dropped by 40% in the West of Ireland? That's a good example of people voting with their feet. Conversely the takings in Brown Thomas (exclusive shop in Dublin) were up by the same amount last year and even more this year.

Of course income tax has reduced (thanks to Mary Harney and Charlie Mc Creevy's policies). When it was sky high on low incomes, the black enonomy thrived and oceans of money flowed out of the country to Off Shore Accounts and other devious methods. That was a sign of intelligent governance. The economy grew to what it is today, assisted by the carrot of being one of the lowest Corporation Tax countries in Europe; an advantage which isn't pleasing our European neighbours. Many other factors contributed to our booming economy which it would take too long to enumerate here.

Responding to some of ClubMan's comments: You seem to assume that everyone is as adept at crunching the numbers and knowing what they are entitled to as you are and well educated AAM forum contributors. If it were so easy why does anyone need to post on AAM to seek this advice? And not everyone has access to a computer or the Internet.

Yes the tax burden is more equally distributed now compared to the past but there is a lot of capacity for increasing tax equity. I am unaware of the possibility of shopping around for electricity, heating, transport (bus/train), phone rental and other basics. Of course I am not suggesting more regulation (the converse) but simply that these essential costs impinge more on low to middle income workers. An obvious solution would be to increase the 20% tax band thus increasing net disposable income. That could be offset by introducing a third tax band for incomes in excess of say €100,000.

I don't see any contradiction is seeking an increase in net income by the widening of tax bands (the equivalent of a tax cut). Why should that impinge on services? That would benefit all workers but particularly those just above the minimum industrial wage - thus helping to buffer them against rising costs of living.

It is accepted that Ireland is one of the most expensive countries in Europe to live in. Fine if one has an above average net income but far from fine for those barely keeping their heads above water - which is getting deeper by the day!