Upcoming budget.

average industrial wage

It makes you wonder what a farce the "average industrial wage" as a measure is. If it is an average how is it that so many workers do not pay tax because they earn less than 17000 per year, methinks it is a measure dreamed up by civil servants to allow them to pay public servants big salaries and the say how their pay relates to the "average industrial wage"
 
DB74 said:
That would be ideal but it's not going to happen. It's too late at this stage to have just one tax rate. Bringing in one tax rate is only going to benefit high-earners no matter what way you look at it.
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I wasn't talking about who it would benefit, but rather talking about a 'fair' solution - though I do agree with you - I can't see it happening in Ireland.
 
shnaek said:
I wasn't talking about who it would benefit, but rather talking about a 'fair' solution - though I do agree with you - I can't see it happening in Ireland.
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Fair enough. If something was introduced which hit low earners harder than high earners as blatantly as a flat tax rate, there would be riots on the streets.

Well, Joe Duffy's phone lines would be jammed to incapacity anyway!
 
DB74 said:
Fair enough. If something was introduced which hit low earners harder than high earners as blatantly as a flat tax rate, there would be riots on the streets.

Well, Joe Duffy's phone lines would be jammed to incapacity anyway!
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It's true - which shows that it isn't fairness that people are concerned about in society in general. People are always concerned about the other guy, particularly if the other guy is richer!
20% of a high earners income is a lot more than 20% of a low earners income, but proportionately they pay the same, which in an ideal world could be described as fair. But begrudgery isn't just an Irish trait, it's a human trait.
 
yes, it is strange that there seems to be some acceptance that a flat rate might be fair but that we can't do it because we don't currently do it - and to try to change would hit lower earners harder - which might be seen to imply that the current (unchangeable) system is unfair to higher earners... Like the post on the previous page where an average earner got an increased take home of 2K in a previous goodtimes budget - easy (and popular) to give but next to impossible to take back even though it should never have been given. And also similar was the taking out of so many people from the tax net - trying to get them back in now is 'unfair because they are hit harder than higher earners' - but they should never have been taken out in the first place. It will be a brave government that tries to go back to square one and design a new tax system.
 
You could lessen the impact of a flat tax two ways; first by getting rid of tax reliefs which generally favour higher earners and secondly by ensuring standard secondary benefits like FIS, BTS etc. The means tested packages are unavailable to the higher earner but there for the people who need extra support.
 
I don't think a totally flat tax would be fair or workable. You could maybe have one low flat tax (but tax nonetheless on ALL income, including pensions and social welfare which might be paid net) up to the level of a living wage and above that a single higher flat tax (to encompass prsi, health levies, income levies) so that everyone kept the same proportion of the fruits of their efforts once a minimum living wage had been reached.
 

Sounds like another eminantly reasonable suggestion.
I wonder what the government will come up with?
 
I prefer the pure flat rate tax on all income from all sources with no exemptions, personal circumstances etc. This is by far the most efficient way of collecting tax. It is also extremely customer friendly - everyone understands, so less mistakes and less excuses. And needs less staff to be employed by Revenue.

The argument that people keep on making against it is that there may be some low income earners who are struggling live, yet are paying tax. These people can be helped with family income suppliments etc.

When you give out exemptions, it is very difficult to know how much money this is costing the state and to hit the target that the exemption is designed to hit. People tend to get creative about claiming exemptions and usually you end up losing a lot more tax revenue than intended. This is as true for the PAYE exemptions as it is for business and property exemptions.

I firmly believe that you are always better to collect all the money in the first instance and then returning some to those who need it as opposed to giving people exemptions. And if you are more efficient at collecting money, you will have more money to spend on the needy.
 

Once you make it two rates you are going to have tinkering with it all over the place. You'll end up with something like we have already. A flat rate tax would be simple to implement. We wouldn't need half the amount of people in the department of finance, nor would we need half the accountants we have, as there would be no work to do. But once you tinker with a simple idea it no longer works.
 
I think a single flat rate of tax would make more sense as it would be easier to administer and would be easy to increase the rate if more tax was required. However, if it was implemented now it would mean lower earners paying more tax and government unlikely to do this.

One other option may be a simple tax scale similar to how the government implemented the pay cuts in civil service.
For example, 10% tax on first 20K, 15% from 20 to 50K, 20% for over 50K.

Does anyone know what percentage of income tax the government takes compared to total income in the country?
 
Here's an interesting article in light of Irish Bond rates heading towards 7%:

http://home.thejournal.ie/do-we-need-the-imf-heres-what-the-world-thinks-2010-09/?h=d88

The last paragraph is particularly scary:

"At the first whiff of a haircut, everybody’s going to want to be the first to bail out entirely. Ireland’s technocratic elite seems to understand that and so it’s unhappily bailing out its foreign lenders at 100 cents on the euro, even [sic] the government continues to slash spending domestically. It’s not fair, everybody knows that. But it might be unavoidable. "
 
Here's some interesting stats:

Income tax target from 2010 Book of Estimates = 11,979m

Average Wage Q1 2010 (CSO) = 35,634 per annum

No. of tax payers in country (Revenue Annual Report) = 2,496,762

Doing the maths, it means that if we had a flat rate tax, the 2010 rate would be: 13.5%

Whats encouraging is that we can easily increase our tax take by 25-30% (i.e. to c.18% flat rate tax) without much difficulty.

Flat rate is the way to go.
 
Minimum wage is €8.65 p/hr = 346 per week (40 hrs).

Tax of 13.5% reduces take home pay for a min. wage earner to 299 per week. This figure is still in excess of the dole. Dont forget, a min wage earner will also get Family Income Suppliment to top up their pay.
 
csirl said:
Flat rate is the way to go.
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as with all of these types of changes, the devil is in the detail. Some will pay more tax, others less. It's a question of who pays more and what political clout they have.

The other thing, is that if this flat rate of tax were to replace all the other taxes such as prisi, income levy etc, our "low tax economy" mightn't look so low after all
 

But look at it this way. 13.5% tax takes in 12bn, we have a shortfall of 20bn, so we will have to increase income tax to 30% to balance the books.
 
Firefly said:
The other thing, is that if this flat rate of tax were to replace all the other taxes such as prisi, income levy etc, our "low tax economy" mightn't look so low after all
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I guess it depends on the math and how much the new rate would bring in with all the additional people paying tax.

I'm on the fence with the system as I don't trust the figures from the countries that have recently switched over to the flat rate.

One issue I do believe is that easier and clearer taxation isn't just attractive to the population, it's attractive to investment. Even if it's only the cost savings on payroll administration, it's attractive.

I still think there should be other taxes too in order to keep the tax on employment down, but they can be kept simple. I think local authorities should be able to generate their own revenue through rates, VAT should stay, duty, etc.

My latest gripe is that the current system is so much weighted to consumer spending that we'll never close the gap. No matter how muchn tinkering with tax rates, no matter how much tinkering with the PS, until we're all (in the words of George Hook) "Millionares" again, that will remain. And to be honest, I know it's not great for retail, but I hope for all our sakes, our spending does remain more modest and representative of this small market.

But all policy from all parties is about how to get more out of people using the tax system we have. Pure bull, we need a complete reshape of how the government collect taxes. It'll probably mean I pay more I've no doubts about that, but a more secure and less vulnerable tax system is essential, not just inventive new taxes to get a few more euro out of people.

It's completely contradictory, but I'd go for a flat rate tax on income only, then look at a limited amount of sales, rates, etc taxes to support that.
 
Towger said:
But look at it this way. 13.5% tax takes in 12bn, we have a shortfall of 20bn, so we will have to increase income tax to 30% to balance the books.
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Only if we maintain the same level of spending/wastage. We could put the rate up to 20%, and cut the rest.
 
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