Some facts about the The Irish Tax System

Interesting data from publicpolicy.ie

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we spend about 4 per cent of GDP on public pensions compared to an EU average of 9 per cent and 14 per cent in Greece. This relatively favourable position will change. The ageing of the population puts upward pressure on public spending and hence on the level of taxation required to pay for it. The cost of the state pension in Ireland is increasing by about €200 million a year as more and more people qualify for the State pension. Therefore, promises to reduce the overall level of taxation should be examined carefully.

the tax paid by a single person on half average earnings is the second lowest in the OECD (out of 34 countries) and is about one-tenth that in Denmark while the tax paid by a single person on two and a half times average earnings is the 7th highest in the OECD.

People in the top decile pay 30 per cent of their gross income in direct tax1 so their disposable income is 70 % of their gross income. Since VAT paid is related to expenditure, a proportional VAT will by definition be regressive as a percentage of income. This impact is mitigated in Ireland (uniquely in the EU with the exception of Malta and the UK) where food which accounts for a sizeable part of the expenditure of low income people is zero rated for VAT. For example, Finland charges 14 % and Denmark charges 25 % on food – so our VAT system is more progressive than other countries.

Don't we pay VAT on pre-cooked and take-away food & drink, either 9% or 13.5%? Anecdotally at least, food from these sources form a significant proportion of low-income families' diets.

Yes, and in restaurants as well.

In the 'austerity' era we've seen a shifting of items such as local services (property tax), refuse charges (polluter pays principle, no waivers), and water charges away from general taxation and bills coming in the door for pensioners for these items.

It would be interesting to see what % impact these items have in relation to the state pension.
Ballpark figures: Property tax you are looking at €200 - €400, refuse charges €150 and water charges €160.
Pensioners with private medical insurance have also been hard hit by state directed increases to levies.

Note I'm not trying to start a discussion about the merits of any of those particular measures, just pointing out their impact on expenditure in retirement.

Also, in a discussion about overall levels of taxation, remember that it is not necessarily the case that cutting tax rates means less tax revenue. If our tax rates are so high on those earning over and above the average wage, there's a fair chance further increases on that segment will bring in the same (or less) revenue.
e.g. http://www.askaboutmoney.com/threads/cutting-taxes-doesnt-mean-less-revenue.198073/

Brendan Burgess said:

Interesting data from publicpolicy.ie

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we spend about 4 per cent of GDP on..

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Yet more drivel statistics based on GDP. The dogs on the street know that Irish GDP figures are hopelessly inflated by multinational transfer pricing. So do the policy shills and lobbyists but they're strangely hesitant to use the more meaningful, and equally accessible, GNP numbers. I wonder why.

Should've copped the GDP usage, yeah anything that isn't GNP for Ireland is unreliable.

T McGibney said:

Yet more drivel statistics based on GDP.

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Good point, but it doesn't throw it out by that much. We are spending 4% of GDP compared to 9% of GDP in Europe.

4% of our GDP of 189 billion, is 4.6% of our GNP of 163 billion. ([broken link removed])

It's still half the level of the rest our Europe.

Brendan

My understanding is that we have the 'youngest' demographic profile of the original 15 EU states. So all things being equal we should be spending less than the average. However it suggests that there's a liability down the line...

Brendan Burgess said:

Good point, but it doesn't throw it out by that much. We are spending 4% of GDP compared to 9% of GDP in Europe.

4% of our GDP of 189 billion, is 4.6% of our GNP of 163 billion. ([broken link removed])

It's still half the level of the rest our Europe.

Brendan

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Again Brendan, it's very unclear just how big the present Irish GDP distortion is, but it seems to be substantial. It was tallied at 17% some years back but the levels of multinational profit taking in Ireland seems to have ballooned since then. If it is now say, 40%, that means the 4% figure is a mile off.

If that is the case, added to the young demographics factor, it rather betrays the authors' argument.