Refundable tax credits

Stark

http://www.irishtimes.com/newspaper/breaking/2010/0705/breaking35.html

CHARLIE TAYLOR

The Green Party has called on Minister for Finance Brian Lenihan to consider a proposal to introduce refundable tax credits for people on low incomes in the next Budget.

Speaking after attending the launch of a new costing document from Social Justice Ireland on refunding credits, the party's finance spokesman Senator Dan Boyle said the move would increase protection for those experiencing financial difficulties.

According to the proposal put forward by Social Justice Ireland, almost 113,300 low-income individuals would directly benefit from a refundable tax credits scheme. When children and other adults in a household are taken into consideration, the total number of beneficiaries could be as much as 240,000, the organisation estimates.

Social Justice Ireland called for the unused portion of personal and PAYE credits to be refunded to those who have not earned enough to have paid tax in a given year. It said that when an individual's income is insufficient to use up all his or her tax credits, the remaining credit could be paid to the individual by means of a cash transfer.

The organisation claimed that such a move would help those on low incomes who do not usually gain from increased tax benefits in budgets.

The proposal was backed by Mr Boyle, who urged the Minister for Finance to give it proper consideration. "In a budget where many further difficult decisions have to be made, advances must also be progressed in protecting the poor in society," he said.

At the publication of the costing document this morning, Social Justice Ireland director Fr Seán Healy said the proposal would not only make the tax system fairer but would also greatly assist the working poor.

"Whether the Government takes this proposal onboard is dependent on whether they think the whole issue of the working poor, is an issue worth addressing," he said. "Those on low incomes should be protected and given incentives to ensure they stay in their jobs and this is a simple way of doing this."

Social Justice Ireland said its proposal would cost the Exchequer about €140 million. This figure varies considerably from a €3 billion estimate provided by the Department of Finance to the Oireachtas Committee on Social and Family Affairs last year.

Commenting on the discrepancy, Fr Healy said Social Justice Ireland's costing document, which was conducted by Robert Ryan and Dr Micheál Collins from the Department of Economics, Trinity College, Dublin, "raised serious concerns" about the Department of Finance's calculations.

"The costings supplied by the Department of Finance were wrong by more than 95 per cent. The figures they provided are totally incredible," he said.

"The department has been challenged on this particular issue many times, and one would have expected them to have had accurate figures to hand. If they haven't got their sums right here then it raises questions as to whether other estimates they've supplied are incorrect,” he added.

A spokesman for the Department said the figures provided to the Oireachtas Committee last year were collated by the Department and the Revenue Commissioners. He said that at that time, Fr Healy was suggesting a more limited refundable tax credit and was unable to provide costings.

"Full consideration will be given to the proposal for refundable tax credits. However, the Commission on Taxation gave this proposal full consideration last year, and it did not recommend that it be introduced," the spokesman said.

I can't believe this is being taken seriously. What next, if you don't earn €36k+ (or whatever salary you start paying high rate of marginal tax on these days), the Government tops you up? Oh wait, they're already phasing that in with the changes to pension reliefs. Get rid of tax credits altogether if you want to make the system fair to those poor people who don't get to pay tax.

jock101

Tax Credits, thats a JOKE!:rolleyes:

For Forks Sake

finance spokesman Senator Dan Boyle

and there I stopped reading, that man is a cretin. Surprised he didn't tweet in his opinion.

ei.sdraob

more welfare?! whats the point of working then

Welease

"The Green Party has called on Minister for Finance Brian Lenihan to consider a proposal to introduce refundable tax credits for people on low incomes in the next Budget.

Speaking after attending the launch of a new costing document from Social Justice Ireland on refunding credits, the party's finance spokesman Senator Dan Boyle said the move would increase protection for those experiencing financial difficulties."

I fkin love that... Only the low paid are experiencing difficulty?.. The rest of us who actually pay for the running of this country are not doing so amazing either.. and btw Danny boy.. there is a large billion euro defecit we need to plug.. now might not be the right time to cut our tax intake even further.

I guess when you have blown your chances that bad... you'll try anything to buy some votes back..

jock101

ei.sdraob wrote: »

more welfare?! whats the point of working then

What is the point of working in this place!:rolleyes:

jimmycrackcorm

jock101 wrote: »

What is the point of working in this place!:rolleyes:

Because apparently the definition of social equality is that someone not contributing to society is either as well off or better than someone who goes out and does work their ass off.

jock101

jimmycrackcorm wrote: »

Because apparently the definition of social equality is that someone not contributing to society is either as well off or better than someone who goes out and does work their ass off.

Yeah right, tell that to the Golden circle and the Dail elite!:rolleyes:

McCruiskeen

jock101 wrote: »

Yeah right, tell that to the Golden circle and the Dail elite!:rolleyes:

You do realise that the "Dail Elite" are put there by the democratic vote of every adult in the country.

How can they be elite? This ain't an African dictatorship.

You ain't gonna find anything less elite than democratically elected representatives..

Someone has gotta run the country, buddy.

jock101

McCruiskeen wrote: »

You do realise that the "Dail Elite" are put there by the democratic vote of every adult in the country.

How can they be elite? This ain't an African dictatorship.

You ain't gonna find anything less elite than democratically elected representatives..

Someone has gotta run the country, buddy.

Thats the problem with Paddy and Biddy, Turkeys voting for Christmas!:rolleyes:

shinikins

Welease wrote: »

I fkin love that... Only the low paid are experiencing difficulty?.. The rest of us who actually pay for the running of this country are not doing so amazing either.. and btw Danny boy.. there is a large billion euro defecit we need to plug.. now might not be the right time to cut our tax intake even further.

I don't know if you realised what you were writing here, but the lower paid in this country also pay taxes that "pay for the running of this country". Cutting our tax intake will do nothing to help the inept running of the country, and neither will increasing it. Until our government chooses to spend whats in the coffers in a wise way instead of frittering it away on useless projects and hugely ineficient departments we'll continue down the same sorry route we're on now.

jock101

shinikins wrote: »

I don't know if you realised what you were writing here, but the lower paid in this country also pay taxes that "pay for the running of this country". Cutting our tax intake will do nothing to help the inept running of the country, and neither will increasing it. Until our government chooses to spend whats in the coffers in a wise way instead of frittering it away on useless projects and hugely ineficient departments we'll continue down the same sorry route we're on now.

Not for the Second, Third or even Fourth time! Has been the way here since 1922!:rolleyes:

Geuze

ei.sdraob wrote: »

more welfare?! whats the point of working then

Refundable tax credits would only help people who work.

You would have to earn wages for this idea to benefit you.

Stark

And decide every now and again that you're feeling tired so you're just going to take the week off and let the State make up the difference. Stupid idea.

ei.sdraob

Geuze wrote: »

Refundable tax credits would only help people who work.

You would have to earn wages for this idea to benefit you.

fine

whats the point of working any harder?

its already impractical for alot of people to work overtime or go into business since they get penalised for being productive with high taxes

this just furthers this trend even more

Geuze

Example (taken from AskAboutMoney)

Tax credits = 3660, so earnings up to 18300 are tax free.


Say you earn 15000.

15000 * 0.20 tax rate = 3000 tax owed

Less tax credits of 3660 = negative tax of -660.

Currently, you simply pay no tax, but do not get the full benefit of the 3660 tax credits. You miss out on 660 tax credits.

If they were refundable, you would receive a payment of 660 (negative tax).

ei.sdraob

Geuze wrote: »

Example (taken from AskAboutMoney)

Tax credits = 3660, so earnings up to 18300 are tax free.


Say you earn 15000.

15000 * 0.20 tax rate = 3000 tax owed

Less tax credits of 3660 = negative tax of -660.

Currently, you simply pay no tax, but do not get the full benefit of the 3660 tax credits. You miss out on 660 tax credits.

If they were refundable, you would receive a payment of 660 (negative tax).

and where will this money materialize from ?

as i said its another form of welfare at a time when our yearly welfare bill is larger than the yearly budget deficit that needs to be borrowed at high interest

Scarab80

ei.sdraob wrote: »

and where will this money materialize from ?

as i said its another form of welfare at a time when our yearly welfare bill is larger than the yearly budget deficit that needs to be borrowed at high interest

From the Social Welfare budget! Could be an idea if it widens the gap between social welfare and low paid work, but it would have to be funded entirely from the social welfare budget on top of other cuts which are needed to be made there aswell.

ei.sdraob

Scarab80 wrote: »

From the Social Welfare budget! Could be an idea if it widens the gap between social welfare and low paid work, but it would have to be funded entirely from the social welfare budget on top of other cuts which are needed to be made there aswell.

so you want to cut one are of welfare to fund this welfare exercise?

what will you cut for this

Scarab80

ei.sdraob wrote: »

so you want to cut one are of welfare to fund this welfare exercise?

what will you cut for this

JSA, JSB, whatever, so long as there is a bigger gap between welfare and employment.

Riskymove

Geuze wrote: »

Tax credits = 3660, so earnings up to 18300 are tax free.

is that the basic tax credit only?

I know you can claim others which may actually increase further what you get

ei.sdraob wrote:

and where will this money materialize from ?

look at it as a tax rebate, the loss is in less tax revenue

X pays 3,000 and gets back 660

so technically just pays 2340

Stark

Riskymove wrote: »

look at it as a tax rebate, the loss is in less tax revenue

X pays 3,000 and gets back 660

so technically just pays 2340

You're mixing things up with normal tax credits surely? In the case of the refundable tax credits, X pays nothing at all and receives 660.

ei.sdraob

Scarab80 wrote: »

JSA, JSB, whatever, so long as there is a bigger gap between welfare and employment.

why not just cut these somewhat if you think they are "disposable" and stop borrowing as much

Riskymove wrote: »

is that the basic tax credit only?

I know you can claim others which may actually increase further what you get




look at it as a tax rebate, the loss is in less tax revenue

X pays 3,000 and gets back 660

so technically just pays 2340

the taxation curve is already steep enough, all you are doing is making it not worth having to work much or harder hindering productivity

for gods sake we already have situations and threads where its better to stay on welfare than work

why make a problem worse


we need to bring more people into the taxnet (half pay feck all as is) not less

Scarab80

ei.sdraob wrote: »

why not just cut these somewhat if you think they are "disposable" and stop borrowing as much

That's why i said on top of other cuts that are needed. Tbh it would have the same affect if decent cuts were made to social welfare but maybe this is a more politically acceptable way to do it. I still think more of the lower paid need to be brought into the tax net but at the same time there must be a real incentive to get off welfare and into a minimum wage job. At the moment i don't think that incentive is there, if anything the incentive is to get onto welfare.

Riskymove

Stark wrote: »

You're mixing things up with normal tax credits surely? In the case of the refundable tax credits, X pays nothing at all and receives 660.

you are right, apologies, I read that wrong

Riskymove

ei.sdraob wrote: »

why make a problem worse

I agree, its a crazy concept

we need to bring more people into the taxnet (half pay feck all as is) not less

a seperate issue really...both things could be done through a reduction in credits

Newaglish

ei.sdraob wrote: »

for gods sake we already have situations and threads where its better to stay on welfare than work

why make a problem worse

It actually widens the gap in earnings between those working and those on job seekers allowance.