ESRI proposes universal social charge

iPlop

On the face of it this looks like a good idea ,greater transparency to where my tax money is going.I suppose the devil will be in the detail and it will only be good if it's fair.

From the RTE website

Research by the Economic and Social Research Institute claims a new universal social charge could bring in enough revenue to replace PRSI, the health levy and the income levy.

Last year, Minister for Finance Brian Lenihan signalled his intention to combine PRSI and the two levies into a single social charge that would be applied to all income, but at a lower rate.

The ESRI research shows a 7.5% charge could raise enough money to replace all three.


The top rate taxpayers would see their marginal rate fall from 52% to 48.5%.

However, all other income groups would lose out, unless there was a compensating mechanism, such as higher top income tax rates.

The ESRI's research will be presented at a conference on budget perspectives later this morning.

Europe 'will not interfere'

A spokesman for the EU Commissioner for Economic and Monetary Affairs has said the European Commission would not interfere with the concrete measures the Government is to lay out in its four-year budgetary plan.

However, Amadeu Altafaj Tardio added that Ireland must reduce the deficit by 3% by 2014.

Mr Tardio said the commission did not want to take any particular stance on the 12.5% corporation tax rate and said it respected the national debate on how Ireland should deal with the economy.

ardmacha

I imagine somethng like this will be introduced, with an explicit increase in the top rate of tax as well, so that everyone pays more.

ei.sdraob

Combining all these levies sure make things easier, right now one needs to be an accountant and spend alot of time to figure out how much one be taxed.

Having uncertainty, complexity and confusion when it comes to any form of taxation is not good, one of the reasons some economists are advocating a simple flat tax.

changes

How they deal with medical card holders with jobs will be an interesting one. At present they are exempt from the income levy and the health levy.

meditraitor

changes wrote: »

How they deal with medical card holders with jobs will be an interesting one. At present they are exempt from the income levy and the health levy.

Is this true?

Jaasus

Aard

I fully approve of such a simplification.


@changes:
The way I read it is that they favour abolishing the health levy and income levy, and just increasing PRSI to 7.5%, while jazzing it up with a new name. This would mean, to me, that even Medical Card holders will have to pay the full 7.5% whack. Nobody escapes, which I think is fairer.

I think the real interesting one is how they will disentangle all the different PRSI bands. there are about twenty different ones, iirc.

xavidub

While it seems pertinent to reform these levies, any situation in which ordinary workers lose out while the higher paid actually pay less tax is completely indefensible and unacceptable.

dvpower

I presume the current PRSI ceiling would also be abolished.

xavidub

dvpower wrote: »

I presume the current PRSI ceiling would also be abolished.

I wonder. The Govt doesn't like to upset those high paid Intel and Pharma executives

changes

xavidub wrote: »

While it seems pertinent to reform these levies, any situation in which ordinary workers lose out while the higher paid actually pay less tax is completely indefensible and unacceptable.

Yeah thats something i'm going to be looking out for in the budget. Lenihan is a bit of a right winger and it wouldn't surprise me if he goes extra tough on the lower paid and hands a little back to his own sort of people (middle/upper classes)

All elitists like a large working poor and an underclass that they can exploit and enrich themselves on the back of.

iPlop

changes wrote: »

Yeah thats something i'm going to be looking out for in the budget. Lenihan is a bit of a right winger and it wouldn't surprise me if he goes extra tough on the lower paid and hands a little back to his own sort of people (middle/upper classes)

All elitists like a large working poor and an underclass that they can exploit and enrich themselves on the back of.

I would have to agree with you there ,it seems this recession has pretty much destroyed the middle class to an extent and I cannot see Lenihan upsetting any chief exec's at the moment ,so he may have to cripple the less well off and those that are recieving redundancy in the next year to come.I am suprised he hasn't gone after the redundancy payments since there has been so many.

Aard

xavidub wrote: »

While it seems pertinent to reform these levies, any situation in which ordinary workers lose out while the higher paid actually pay less tax is completely indefensible and unacceptable.

"Lose out" in the sense that they will go from paying ZERO income tax* to a 7.5% social insurance? In all other countries with a generous Social Welfare system, even the poor pay at least 15% of their gross income in income tax. I would think it normal that the average worker pay at least 25% of gross in income tax. As it is, the richest 30% pay over two-thirds of all income tax.


And, fwiw, I do think that the super-rich should pay more, for example in a wealth tax, and definitely by getting rid of the PRSI ceiling.



*If you read the document, Lenihan admits this.

xavidub

Aard wrote: »

"Lose out" in the sense that they will go from paying ZERO income tax* to a 7.5% social insurance? In all other countries with a generous Social Welfare system, even the poor pay at least 15% of their gross income in income tax. I would think it normal that the average worker pay at least 25% of gross in income tax. As it is, the richest 30% pay over two-thirds of all income tax.


And, fwiw, I do think that the super-rich should pay more, for example in a wealth tax, and definitely by getting rid of the PRSI ceiling.



*If you read the document, Lenihan admits this.

I agree, and the PRSI ceiling was exactly what I had in mind.

Scarab80

ei.sdraob wrote: »

Combining all these levies sure make things easier, right now one needs to be an accountant and spend alot of time to figure out how much one be taxed.

Having uncertainty, complexity and confusion when it comes to any form of taxation is not good, one of the reasons some economists are advocating a simple flat tax.

Exactly for a small businessman running a manual payroll system, the changing rates of contribution and method of calculation are unnecessarily complex and almost always result in errors. If it saves 5 mintues out of someones day it is worth it.

Sizzler

I for one am very wary of any "policy" that uses the word social in it.

Look where social partnership got us. Its basically FF / union speak for fleecing the taxpayer :mad: