# Differing Tax policies



## cynical (27 Mar 2003)

Anyone ideas on why when faced with a slowdown in the Irish economy Charlie raised taxes while in the States they were reduced?
Forgive my ignorance but hasn't Charlie always said that the increases in tax revenues over the years were down to lower taxes.


----------



## ClubMan (27 Mar 2003)

*Anyone ideas on why when faced with a slowdown in the Irish economy Charlie raised taxes while in the States they were reduced?*


What tax increases do you mean? Bar the [broken link removed] 1% increase in the lower rate of VAT to 13.5%, the increased excise duties on the "old reliables", significantly increased fixed stamp duty charges on credit/debit/ATM cards, abolition of CGT indexation/roll-over  reliefs, etc. weren't things left more or less as before - in fact many exemption limits/ceilings were actually increased.


----------



## Contango10 (27 Mar 2003)

Cynical,

certain tax *rates* may have been increased in the last Budget, but the overall *burden* of tax in Ireland is still *low* by international standards.  Some would say very low.

Out of a GDP (national income) of €114.5 billion in 2001 the Government took €28 billion in tax, which equals about 25% of income. In most European states this is well over 40% of GDP, up to 50% in some Nordic countries.

Ireland is a low-tax country.

Contango10


----------



## cynical (27 Mar 2003)

I agree, Ireland as a whole is indeed a low tax country with an even lower return for taxes.
However I would like to see a more detailed breakdown of who pays tax. You say
"Out of a GDP (national income) of €114.5 billion in 2001 the Government took €28 billion in tax, which equals about 25% of income. In most European states this is well over 40% of GDP, up to 50% in some Nordic countries."

however from my experience of living in a Nordic country when I paid 45% of my salary in tax ( & got an extremely good return) I knew that the more significantly richer guy up the road was also paying 45% & not availing of various tax breaks to avoid paying tax.

What I was refeing to in terms of the governemt tax policy was that when faced with a situation of a slowing economy they only slightly incresed the tax bands & allowances.Also through measures of stealth tax increases have contributed to 1.5% of our present inflation rate.

So would it be fair to say that theres nothing wrong with Irelands tax rates but how we collect them? I tend to think its a mixture of both.


----------



## Tommy (27 Mar 2003)

Usually (but not always) tax breaks are provided for very good reasons - generally as an incentive to people to do things that generate personal benefits but also generate socially desirable results also 

e.g. 

on a micro scale...
invest in pensions - thus taking a future burden off the State when one reaches old age

-take out health insurance - thus (in theory) relieving the public health system

- take out mortgages - so that people can buy their own homes

on a macro scale...
- finance construction of hotels etc when Ireland's hotel infrastructure was insufficient
- renew degraded or run-down urban areas by offering incentives to build or reburbish properties.

I'm not saying all these tax breaks are justified - I'm merely making the comment that there is usually some social justification to most tax break schemes. 

In recent years, questions have been raised as to the value of using the tax system to encourage certain behaviour. As a result, the popularity of tax breaks as a Govt policy device seems to be on the wane.


----------



## Debasser (27 Mar 2003)

From what I have read it looks like we agree that we have low tax rates & tax breaks are in the whole a good idea to encourage investment in infrastructure. 

However I also agree that to simply increase taxes & expect a direct increase in services is foolish.

Anyone any ideas in what we need to do tax wise to get this country moving in the right direction?? 

Personally I believe in increasing taxes & placing penalties for non-compliance at such a level that it would encourage compliance. Sorry we have those penalties, mabe just enforce them!

Interesting is the whole culture of tax avoidance here. In the US to be caught by the IRS for tax avoidance is very much frowned upon. However we seem to take pleasure out of those who get away with it. We Irish are mighty strange.! :shamrock


----------



## ClubMan (27 Mar 2003)

*Sorry we have those penalties, mabe just enforce them!*

Surely they are being enforced - just look at the action being taken on foot of DIRT evasion, bogus non resident accounts, the Criminal Assets Bureau etc.

*In the US to be caught by the IRS for tax avoidance is very much frowned upon. However we seem to take pleasure out of those who get away with it.*

In general, we all know that tax _evasion_ is illegal while tax _avoidance_ is not. However the Revenue have a wealth of anti-avoidance policies/legislation in their armoury with which to tackle transactions structured purely/mainly to avoid tax.


----------



## Tommy (27 Mar 2003)

Just to clear up any confusion, I think it is generally accepted that the vast majority of the high earners who are recorded as paying very small percentages of tax on their earnings, do so through entirely legal tax avoidance - typically by investing in tax incentive properties and the like.

Incidentially, investment in urban renewal incentive properties and the like are exempt from the scope of the anti-avoidance legislation in our tax code. It is only where these reliefs and tax breaks are used in a manner not envisaged in the legislation that the question of anti-avoidance measures arise.


----------



## rainyday (27 Mar 2003)

I think there has been a common acceptance and even admiration of tax evasion in the past, as demonstrated by the prevalance of bogus non-resident accounts in the 70's & 80's. But I do think this is changing slightly.

However, the prevelance of 'price for cash' discounts still worries me today.

I wonder about the benefits arising from the many tax incentive schemes that we've seen in recent years. Quite apart from the moral/policy issues involved, I just wonder if we'll end up with a load of half-empty hotels & holiday homes in a few years time.

If the business isn't there to support the development of such ventures today (without tax incentives), will there be sufficient business to support the ongoing use of the ventures tomorrow.


----------



## Tommy (27 Mar 2003)

> However, the prevelance of 'price for cash' discounts still worries me today.



It should be remembered that in many retail outlets "price for cash" discounts mean discounts for non-credit card transactions, thus saving 2.5% credit card charges for the retailer.


----------



## ClubMan (27 Mar 2003)

*If the business isn't there to support the development of such ventures today (without tax incentives), will there be sufficient business to support the ongoing use of the ventures tomorrow.*

What's _Labour's_ official line on _laissez faire_ capitalism these days?  

:lol


----------



## rainyday (27 Mar 2003)

> It should be remembered that in many retail outlets "price for cash" discounts mean discounts for non-credit card transactions, thus saving 2.5% credit card charges for the retailer.



Yep - that's true. But it wasn't really the retail world I was thinking about. I was thinking more about the cases whereby the householder colludes with the small tradesman to defraud the taxman by agreeing a 'price for cash'.



> What's Labour's official line on laissez faire capitalism these days?



Well, you could always trawl through the [broken link removed] if you have a few hours to kill. I haven't read it all, but it is generally supportive of commercial activity, e.g.

- Tackle the cost of insurance, which is choking small business, by promoting competition in the insurance sector, reducing the cost of claims, and taking measures to reduce legal costs.
- Examine ways to facilitate simpler reporting requirements to state agencies.
- Promote ways of encouraging better use of information technology, particularly among SMEs and the traditional sectors, particularly through support for training
- We will increase the small gains allowance for a married couple to €5,000 per year, but thereafter capital gains will be taxed on the same basis as income. The existing full exemption for the family home will be fully protected and employee share ownership schemes will be exempted.

though I'm sure some of the rampant capitalists might not like the proposed increased supports for consumers, employees, regulators etc.


----------



## ClubMan (27 Mar 2003)

I was only joking! :eek


----------



## Tommy (27 Mar 2003)

*old news???*

Pat Rabbitte is hardly going to persist with the manifesto that ultimately cost Ruairi Quinn his leadership??


----------



## rainyday (27 Mar 2003)

*Re: old news???*



> Pat Rabbitte is hardly going to persist with the manifesto that ultimately cost Ruairi Quinn his leadership??



Ah sure it wasn't the manifesto that caused Ruari's problems at all. It was all the damned voters fault - they wouldn't give him enough votes.


----------



## Debasser (28 Mar 2003)

*Re: old news???*

Theres always "New Labour"......


----------

