Tax in Ireland... or lack of

Foghladh

Do we in Ireland really pay enough in tax for the services that we would like? Or do we get hit with such a scattergun approach that it feels like we're being subjected to a barrage of levies and charges?

I spend quite a bit of time in Sweden and whilst here you witness the vaunted swedish model at work. Efficient public services, excellent healthcare, a childcare system that we couldn't dream of at home, amongst other things. I've generally put it down to a high taxation regime and thought little more of it. I pay my taxes at home so I've never had to bear the brunt of it.

Only recently though I started to look into it a little further and was surprised to find that the average rate of tax here is approx 32%, dependent on where you live. I'd always assumed that taxes were much higher or else how could they afford such high expenditures. After reading a different thread on here yesterday I went hunting and managed to talk to a city councillor to get a bit more information.

The main approach of the swedish system seems to be that everybody pays. The state offers high quality care that everybody can avail of so therefore everybody digs in. You get assessed individually regardless of marital status and, regardless of your starting salary, you'll pay the 32% rate upto approx 38000 euro. That money will go to your local authority who will administer all your services.

Beyond 38000 euro you'll pay 20% on the next ten thousand and after that 25% on the balance (All figures are open to a little leeway regarding exchange rates!) In addition you'll pay 7% towards your pension and generally charges for water and refuse are handled on top of that to your housing committee.

And that's pretty much that. Employers cover the PRSI payment (at about 30%) and of course you'll still pay VAT on goods, capital gains etc. but essentially that's your tax burden. For a little over 40% of your salary you get a standard of living and services that really is second to none.

In comparison at home we have a system where lower income earners are pretty much exempted entirely from income tax and some one on a salary of 35000 a year will in real terms pay very little.
http://www.revenue.ie/en/about/publications/statistical/2010/index.html
Looking at the Revenue figures for 2009, in the bracket 30-35K there were 155,769 individuals earning 5.051 billion euro cumulative. The income tax take? 275 million euro. Out of a gross income of over 82 billion the state took in a little over 10.5 billion for that year. The actual income tax deduction on salaries is actually rather small.


Now I know that we're subjected to a whole raft of charges after that. The USC, VRT on our cars, GP charges, A&E charges, refuse, proposed water charges, septic tank charges etc etc. I'm also aware that the swedish economy is different to our own right now but in theory would we be willing to follow along a similar line to the swedes? Would you be happy to forgo such a portion of your paycheck on payday if it meant getting the range of services that they enjoy, rather than being subjected to a number of smaller charges in endless succession?

heate

Foghladh wrote: »

Do we in Ireland really pay enough in tax for the services that we would like? Or do we get hit with such a scattergun approach that it feels like we're being subjected to a barrage of levies and charges?

I spend quite a bit of time in Sweden and whilst here you witness the vaunted swedish model at work. Efficient public services, excellent healthcare, a childcare system that we couldn't dream of at home, amongst other things. I've generally put it down to a high taxation regime and thought little more of it. I pay my taxes at home so I've never had to bear the brunt of it.

Only recently though I started to look into it a little further and was surprised to find that the average rate of tax here is approx 32%, dependent on where you live. I'd always assumed that taxes were much higher or else how could they afford such high expenditures. After reading a different thread on here yesterday I went hunting and managed to talk to a city councillor to get a bit more information.

The main approach of the swedish system seems to be that everybody pays. The state offers high quality care that everybody can avail of so therefore everybody digs in. You get assessed individually regardless of marital status and, regardless of your starting salary, you'll pay the 32% rate upto approx 38000 euro. That money will go to your local authority who will administer all your services.

Beyond 38000 euro you'll pay 20% on the next ten thousand and after that 25% on the balance (All figures are open to a little leeway regarding exchange rates!) In addition you'll pay 7% towards your pension and generally charges for water and refuse are handled on top of that to your housing committee.

And that's pretty much that. Employers cover the PRSI payment (at about 30%) and of course you'll still pay VAT on goods, capital gains etc. but essentially that's your tax burden. For a little over 40% of your salary you get a standard of living and services that really is second to none.

In comparison at home we have a system where lower income earners are pretty much exempted entirely from income tax and some one on a salary of 35000 a year will in real terms pay very little.
http://www.revenue.ie/en/about/publications/statistical/2010/index.html
Looking at the Revenue figures for 2009, in the bracket 30-35K there were 155,769 individuals earning 5.051 billion euro cumulative. The income tax take? 275 million euro. Out of a gross income of over 82 billion the state took in a little over 10.5 billion for that year. The actual income tax deduction on salaries is actually rather small.


Now I know that we're subjected to a whole raft of charges after that. The USC, VRT on our cars, GP charges, A&E charges, refuse, proposed water charges, septic tank charges etc etc. I'm also aware that the swedish economy is different to our own right now but in theory would we be willing to follow along a similar line to the swedes? Would you be happy to forgo such a portion of your paycheck on payday if it meant getting the range of services that they enjoy, rather than being subjected to a number of smaller charges in endless succession?

Nope. I pay very few 'stealth' taxes here and any increase in my tax rate would actually take more money out of my pocket (living in Zurich) without creating any benefit for me.
At least everyone has to pay stealth taxes allowing the government to at least get something out of tax dodgers.

I'm not saying Switzlerland is perfect but it has it's pluses.
25% on 200K CHF and excellent public services and a reasonable compulsory private health insurance system.

Foghladh

heate wrote: »

Nope. I pay very few 'stealth' taxes here and any increase in my tax rate would actually take more money out of my pocket (living in Zurich) without creating any benefit for me.
At least everyone has to pay stealth taxes allowing the government to at least get something out of tax dodgers.

I'm not saying Switzlerland is perfect but it has it's pluses.
25% on 200K CHF and excellent public services and a reasonable compulsory private health insurance system.

Well I'm not familiar with the Swiss system of taxation. Is that 25% off at the base or does it follow a similar system to home with bands and exemptions?

I think your comment about the tax dodgers highlights another issue as well. From what I hear mentioned, it doesn't appear to be as prevalent over here. I'm not sure if it's that the swedish tax net is so efficient or that it's a matter of social conscience, but I suspect it's a little of both

AlekSmart

Foghladh wrote: »

In comparison at home we have a system where lower income earners are pretty much exempted entirely from income tax and some one on a salary of 35000 a year will in real terms pay very little.
http://www.revenue.ie/en/about/publications/statistical/2010/index.html

Looking at the Revenue figures for 2009, in the bracket 30-35K there were 155,769 individuals earning 5.051 billion euro cumulative. The income tax take? 275 million euro. Out of a gross income of over 82 billion the state took in a little over 10.5 billion for that year. The actual income tax deduction on salaries is actually rather small.

Top post Foghladh.

It has to be remembered that for decades the various Ministers for Finance opened their Budget Speeches with stenorian asurances that x number of people would be "Removed from The Tax Net completely".

These statements became standards which each successive Minister just HAD to recite if he was'nt to be immediately targeted by an opposition Nuclear Ballistic Missile.

The result of all this insane misplaced generosity was to bring our National Tax Base (The Contributing Classes) down to a totally unsustainable level,whilst coincidentally giving a sense of added wealth and importance to groups who simply could'nt finance that.

What were they thinking of......It seems to me to be intertwined with some deep rooted Catholic need to be generous and caring at the expense of being realistic and prudent .?

Foghladh

What has always struck me as odd is the absolute refusal to consider a proper reform of the income tax system. It seems to be more tinkering around the edges rather than tackling the problem head on and admitting that the majority of citizens do not contribute an adequate amount of income tax. I stress income tax here because instead we get handed down a litany of ancillary taxes.

I'd have more respect for the politician who stood up and whacked everything into one hefty income tax deduction than someone who tried to pretend that nothing had changed and instead implemented a series of 'levies'. I don't think I can remember the last time I heard an elected representitive suggest a tax hike though

Sully

How is childcare different to Ireland?

Dannyboy83

Foghladh wrote: »

What has always struck me as odd is the absolute refusal to consider a proper reform of the income tax system.

It's not really odd, it goes hand in hand with an absolute refusal to consider a proper reform of the public services; Instead we get the croke park agreement.

Open to correction, but didn't the government give a tax amnesty in the 90s after devaluation? Then when the tax rates were reduced and various tax allowances were allowed, the number of people declaring and paying their taxes surged.

Would you be happy to forgo such a portion of your paycheck on payday if it meant getting the range of services that they enjoy, rather than being subjected to a number of smaller charges in endless succession?

Absolutely. I would love it in fact.
But look - we have had an unprecedented opportunity to reform our services and we squandered it.

Fine Gael were elected on a promise of reform, yet one of their ministers recently came out and said they there would be nuclear winter if we tried to reform the public services.

Outkast_IRE

From having family living in germany , it comes up in conversation quite often about tax differences, my brother earns decent money, and before his pay packet gets to him theres at least 1/3 of it gone to tax each month.

Hes fine with this as the quality of healthcare is good and if you are unemployed they have good upskilling courses that you must complete and pass to keep benfits.

He feels hes much better off there than here because hes not constantly expecting stealth taxes for everything. Its honestly a much more desirable system imo.

Scofflaw

One might almost think the idea is to offer, as Ryanair does, a low "headline rate" and plenty of apparent freebies, without actually being all that low-cost.

Of course, that would suggest that the watchers and commenters on the Irish tax system in general only offer extremely shallow analysis.

cordially,
Scofflaw

Foghladh

Sully wrote: »

How is childcare different to Ireland?

I'd class it as being much more accessible and a lot cheaper. Kids are entitled to pre-school from aged 1 onwards and they generally don't start primary school until aged 7. The cost depends on what type of pre-school you send them to. Some are montesori, some waldorf, some more basic playschools. I walk past a tri-lingual creche on my way to the subway in the morning. In fact on the 500 metre walk I past 5 creches, they're like a cottage industry here in some ways.

My two kids were in pre-school here and it cost us about 300 a month, that compared to 1400 a month when we were in Dublin. You'd drop them in at 8am and pick them up at 3pm. That's the other characteristic of the childcare that i've noticed. It's not just child friendly but also work hour friendly. The schools are similar in that they'll open their doors early and offer 'free time' activities for the kids in order to let the parents get to work. In return the work is flexible to allow parents to get away to pick up the kids about 3 or 4 ish.

The parental leave is 16 months of mostly paid leave and it's shared between both parents. You have to take 2 months of it each and then the balance can be shared between mother and father. You can even spread it over 8 years so you can take an extra couple of weeks each year for whatever reason. My kids were born here but since I worked at home in Ireland I never I claimed the time. My ex however is still dipping into her leave 6 years on.

All in all it's a lot easier to juggle working life with kids and of course this is the point of their system of care. It makes it easier for people to have kids and keep on working afterwards. Keeps the taxpayers of the present happy and makes sure there are taxpayers in the future

heate

Foghladh wrote: »

Sully wrote: »

How is childcare different to Ireland?

I'd class it as being much more accessible and a lot cheaper. Kids are entitled to pre-school from aged 1 onwards and they generally don't start primary school until aged 7. The cost depends on what type of pre-school you send them to. Some are montesori, some waldorf, some more basic playschools. I walk past a tri-lingual creche on my way to the subway in the morning. In fact on the 500 metre walk I past 5 creches, they're like a cottage industry here in some ways.

My two kids were in pre-school here and it cost us about 300 a month, that compared to 1400 a month when we were in Dublin. You'd drop them in at 8am and pick them up at 3pm. That's the other characteristic of the childcare that i've noticed. It's not just child friendly but also work hour friendly. The schools are similar in that they'll open their doors early and offer 'free time' activities for the kids in order to let the parents get to work. In return the work is flexible to allow parents to get away to pick up the kids about 3 or 4 ish.

The parental leave is 16 months of mostly paid leave and it's shared between both parents. You have to take 2 months of it each and then the balance can be shared between mother and father. You can even spread it over 8 years so you can take an extra couple of weeks each year for whatever reason. My kids were born here but since I worked at home in Ireland I never I claimed the time. My ex however is still dipping into her leave 6 years on.

All in all it's a lot easier to juggle working life with kids and of course this is the point of their system of care. It makes it easier for people to have kids and keep on working afterwards. Keeps the taxpayers of the present happy and makes sure there are taxpayers in the future

Yes but who is paying for all of this paid leave? Is it all being fulfilled from the employers prsi contributions?

On the other hand why does anyone need that much time off work? The post has to be filled by someone else. Why should you be paid if you're not working!

Fromthetrees

Foghladh wrote: »

Do we in Ireland really pay enough in tax for the services that we would like? Or do we get hit with such a scattergun approach that it feels like we're being subjected to a barrage of levies and charges?

I spend quite a bit of time in Sweden and whilst here you witness the vaunted swedish model at work. Efficient public services, excellent healthcare, a childcare system that we couldn't dream of at home, amongst other things. I've generally put it down to a high taxation regime and thought little more of it. I pay my taxes at home so I've never had to bear the brunt of it.

Only recently though I started to look into it a little further and was surprised to find that the average rate of tax here is approx 32%, dependent on where you live. I'd always assumed that taxes were much higher or else how could they afford such high expenditures. After reading a different thread on here yesterday I went hunting and managed to talk to a city councillor to get a bit more information.

The main approach of the swedish system seems to be that everybody pays. The state offers high quality care that everybody can avail of so therefore everybody digs in. You get assessed individually regardless of marital status and, regardless of your starting salary, you'll pay the 32% rate upto approx 38000 euro. That money will go to your local authority who will administer all your services.

Beyond 38000 euro you'll pay 20% on the next ten thousand and after that 25% on the balance (All figures are open to a little leeway regarding exchange rates!) In addition you'll pay 7% towards your pension and generally charges for water and refuse are handled on top of that to your housing committee.

And that's pretty much that. Employers cover the PRSI payment (at about 30%) and of course you'll still pay VAT on goods, capital gains etc. but essentially that's your tax burden. For a little over 40% of your salary you get a standard of living and services that really is second to none.

In comparison at home we have a system where lower income earners are pretty much exempted entirely from income tax and some one on a salary of 35000 a year will in real terms pay very little.
http://www.revenue.ie/en/about/publications/statistical/2010/index.html
Looking at the Revenue figures for 2009, in the bracket 30-35K there were 155,769 individuals earning 5.051 billion euro cumulative. The income tax take? 275 million euro. Out of a gross income of over 82 billion the state took in a little over 10.5 billion for that year. The actual income tax deduction on salaries is actually rather small.


Now I know that we're subjected to a whole raft of charges after that. The USC, VRT on our cars, GP charges, A&E charges, refuse, proposed water charges, septic tank charges etc etc. I'm also aware that the swedish economy is different to our own right now but in theory would we be willing to follow along a similar line to the swedes? Would you be happy to forgo such a portion of your paycheck on payday if it meant getting the range of services that they enjoy, rather than being subjected to a number of smaller charges in endless succession?

The only people who effectively pay no tax are people not working, whether they are 4 or 40, they merely pay a percentage back in tax of what they've already been given, if they're 4 their parents pay, if they're 40 than everyone who works pays.

Income tax is one side of the coin, indirect taxation is the other, and in Ireland the coin is more weighted towards the latter.
http://www.eapn.ie/eapn/policy/resources-on-taxation/sources-of-tax-revenue

Indirect taxation also affects people on lower incomes disproportionately more than people on higher incomes. To me it's all about what things cost as a percentage of your income.

In principle, everybody should pay income tax, from the dole up to a million a year, but indirect taxes would need to come down in order to counterbalance this completely before we can move on from that position to ensure fairness.

heate

Fromthetrees wrote: »

Foghladh wrote: »

Do we in Ireland really pay enough in tax for the services that we would like? Or do we get hit with such a scattergun approach that it feels like we're being subjected to a barrage of levies and charges?

I spend quite a bit of time in Sweden and whilst here you witness the vaunted swedish model at work. Efficient public services, excellent healthcare, a childcare system that we couldn't dream of at home, amongst other things. I've generally put it down to a high taxation regime and thought little more of it. I pay my taxes at home so I've never had to bear the brunt of it.

Only recently though I started to look into it a little further and was surprised to find that the average rate of tax here is approx 32%, dependent on where you live. I'd always assumed that taxes were much higher or else how could they afford such high expenditures. After reading a different thread on here yesterday I went hunting and managed to talk to a city councillor to get a bit more information.

The main approach of the swedish system seems to be that everybody pays. The state offers high quality care that everybody can avail of so therefore everybody digs in. You get assessed individually regardless of marital status and, regardless of your starting salary, you'll pay the 32% rate upto approx 38000 euro. That money will go to your local authority who will administer all your services.

Beyond 38000 euro you'll pay 20% on the next ten thousand and after that 25% on the balance (All figures are open to a little leeway regarding exchange rates!) In addition you'll pay 7% towards your pension and generally charges for water and refuse are handled on top of that to your housing committee.

And that's pretty much that. Employers cover the PRSI payment (at about 30%) and of course you'll still pay VAT on goods, capital gains etc. but essentially that's your tax burden. For a little over 40% of your salary you get a standard of living and services that really is second to none.

In comparison at home we have a system where lower income earners are pretty much exempted entirely from income tax and some one on a salary of 35000 a year will in real terms pay very little.
http://www.revenue.ie/en/about/publications/statistical/2010/index.html
Looking at the Revenue figures for 2009, in the bracket 30-35K there were 155,769 individuals earning 5.051 billion euro cumulative. The income tax take? 275 million euro. Out of a gross income of over 82 billion the state took in a little over 10.5 billion for that year. The actual income tax deduction on salaries is actually rather small.


Now I know that we're subjected to a whole raft of charges after that. The USC, VRT on our cars, GP charges, A&E charges, refuse, proposed water charges, septic tank charges etc etc. I'm also aware that the swedish economy is different to our own right now but in theory would we be willing to follow along a similar line to the swedes? Would you be happy to forgo such a portion of your paycheck on payday if it meant getting the range of services that they enjoy, rather than being subjected to a number of smaller charges in endless succession?

The only people who effectively pay no tax are people not working, whether they are 4 or 40, they merely pay a percentage back in tax of what they've already been given, if there 4 their parents pay, if they're 40 than everyone who works pays.

Income tax is one side of the coin, indirect taxation is the other, and in Ireland the coin is more weighted towards the latter.
http://www.eapn.ie/eapn/policy/resources-on-taxation/sources-of-tax-revenue

Indirect taxation also affects people on lower incomes disproportionately more than people on higher incomes. To me it's all about what things cost as a percentage of your income.

In principle, everybody should pay income tax, from the dole up to a million a year, but indirect taxes would need to come down in order to counterbalance this completely before we can move on from that position to ensure fairness.

I agree that everyone should pay taxes it is crucial.
As far as I can see there is too much cash being paid to people under the table and this undermines paye workers. I'm not saying everyone is at it but there's a definite culture of it.
But taxes are already high enough thi belief in higher taxes means more money for the gov to lines people's pockets and creates ineffeciencys.

Foghladh

heate wrote: »

Yes but who is paying for all of this paid leave? Is it all being fulfilled from the employers prsi contributions?

On the other hand why does anyone need that much time off work? The post has to be filled by someone else. Why should you be paid if you're not working!

I assume it's paid for by the employers contributions but of that I'm not certain.

In so far as parental leave goes I don't feel it's excessive. And as I said it's shared between parents. In Ireland a mother will be entitled to 6 months of paid leave whilst a father will get squat. In Sweden both will get 6 months with the payment capped at 80% of your salary upto a ceiling of 40 thousand-ish. The remaining 2 months of your leave you'll be entitled to a nominal payment of about 15 quid a day. Also you can't both take the leave at the same time except for the 2 months after birth. It's there as a child-care measure and designed so that it can be rotated, meaning a mother isn't consigned to the home solely looking after the child and the father has some involvement. A portion of the time can however be signed over to the other parent.

Like so many things not all these measures are in place just out of niceness it should be noted. The emphasis on childcare is seen as the right thing to do but it also has a benefit for all that it costs. Birth rates were dropping here so it was seen as a measure to halt that trend by easing the burden. 80% of mothers here work as opposed to 55% at home, becuse it's easier for them to do so. I talked to one counsellor years ago who could even show me figures relating to the economic cost of absent fathers in the home. The measures to involve dads in childcare is as much about building a bond and fostering responsibility as it is to avoid the cost to the state in later years if the father should walk away and shirk those responsibilities. Much better to subsdise the first 6 months of a childs life than to subsidise the child for the next 18 years

AlekSmart

Outkast_IRE wrote: »

From having family living in germany , it comes up in conversation quite often about tax differences, my brother earns decent money, and before his pay packet gets to him theres at least 1/3 of it gone to tax each month.

Hes fine with this as the quality of healthcare is good and if you are unemployed they have good upskilling courses that you must complete and pass to keep benfits.

He feels hes much better off there than here because hes not constantly expecting stealth taxes for everything. Its honestly a much more desirable system imo.

The German,and Northern European Taxation situation kinda underlines the nonsensical fairytale nature of our Governments policies.

Our Governments needed to be bringing as many INTO the taxation net as possible and selling this by referencing the benefits available to contributors,instead we ploughed on telling folks that even if they paid sod-all into the system,it would still provide for their needs.......Lunacy,which has now surfaced to devour us.