Overhaul of Tax System

Pythia

Budget 2006 is fast approaching and I'm wondering how all of you would change the tax system?
How could you make it fairer, more productive, what should it be targeting or should it be there at all?
If you were in charge what would your policies be?

defiantshrimp

I'd get rid of many of these stealth taxes like the duty on credit cards and ATM cards. Also I'd get rid of VRT on new cars since it prevents people buying newer more efficient cars. And for my benefit I'd tax dividends at the same rate as capital gains and reintroduce indexing of capital gains which they got rid of 2 or so years ago.

I'm also a big fan of the idea of a flat income tax, ie. only one tax band. But it'd be tricky to introduce!

Guy:Incognito

defiantshrimp wrote:

I'd get rid of many of these stealth taxes like the duty on credit cards and ATM cards. Also I'd get rid of VRT on new cars since it prevents people buying newer more efficient cars. And for my benefit I'd tax dividends at the same rate as capital gains and reintroduce indexing of capital gains which they got rid of 2 or so years ago.

Ahh simplistic economics. Where exactly would you make up the more than €1bn shortfall?

defiantshrimp wrote:

I'm also a big fan of the idea of a flat income tax, ie. only one tax band. But it'd be tricky to introduce!

You're obviously fortunate enough to be in a high income bracket

OfflerCrocGod

defiantshrimp wrote:

I'm also a big fan of the idea of a flat income tax, ie. only one tax band. But it'd be tricky to introduce!

Do you come from planet Vodoo economics? "tricky to introduce!" talk about understatement........ :rolleyes:

Blackjack

Generally the Income Tax system in Ireland is reasonably fair. The TFA for people is very good compared to a number of other Countries. I think they could raise the band in relation to the higher rate of tax by a few thousand but that would have to be done gradually.

I think the only really negative issue is that there are ways for people to completely avoid tax, and thereby ending up paying up 0% tax.

Then again, if the means are there to avoid tax, why not use them?.

We already have one of the lowest Witholding Tax rates on dividends in the EU, as it happens.

davidoco

Put a limit on the amount of tax relief you can avail of, this of course if only for those rich 100 or whatever. Say for example that the max tax relief you can claim is 55% of your gross income. This would mean that those people for example earning over 500,000 per year would be limited in the amounts of relief they can claim from section 21, 34, 55 and 32 not forgetting section 23.

dahamsta

Can anybody give me a good reason why tax can't be calculated on a sliding scale, as against the current two-tier system? Is complexity the only factor? Is it really that complex?

Meh

davidoco wrote:

Put a limit on the amount of tax relief you can avail of, this of course if only for those rich 100 or whatever. Say for example that the max tax relief you can claim is 55% of your gross income. This would mean that those people for example earning over 500,000 per year would be limited in the amounts of relief they can claim from section 21, 34, 55 and 32 not forgetting section 23.

In the US, they have something called the "Alternative Minimum Tax" which limits the amount of tax relief the rich can avail of. Basically, you pay either your regular income tax (including all reliefs, tax shelters, write-offs, allowances) -or- you pay the AMT, whichever is greater. This means that rich people with good accountants can't get away with paying zero tax, like they can here.

I'd assess every single tax allowance and relief, to see if they give a socially useful incentive. I'd keep tax relief for pension contributions and childcare fees but dump relief for artists, racehorses and investment property (the property market is overheated enough). I'd also cut the tax-refund limit for charitable donations from €250 to €100.

woody

I would heavily tax the rich,bloodstock owners,betting shops,alcohol, cigarettes.


Reduce taxes on VAT to the same as the UK, Remove VRT, Remove ATM/CC Tax, reduce fuel duty on petrol and diesel in a nutshell tax the rich to the upmost extreme and for once let the middle class who pay all breath.

Also make more incentives for the supposed lower(hate using this term) class, to work and not to sponge of the state like quite a lot do, not all...

The above increases could easily make up for the difference in Motor taxation and VAT.

Guy:Incognito

woody wrote:

The above increases could easily make up for the difference in Motor taxation and VAT.

€1bn is a lot to make up. The "rich" getting taxed would have to include people on considerably less than the likes of a quarter of a million a year.

defiantshrimp

Stekelly wrote:

Ahh simplistic economics. Where exactly would you make up the more than €1bn shortfall?

I resent that you think it is simplistic economics to reform capital gains. Encouraging all people to take a stake in the factors of production of society is a worthwhile aim and it will help reduce income inequality in society. Also the credit card tax and VRT and other similar taxes are a farce. The government claims to be low tax and saddles us with these stealth taxes.

Stekelly wrote:

You're obviously fortunate enough to be in a high income bracket

No actually! I'm an unwaged economics student finding it hard to get a part time job at the moment.

OfflerCrocGod wrote:

Do you come from planet Vodoo economics? "tricky to introduce!" talk about understatement........

I don't see how tricky to introduce makes something Voodoo economics. Carbon credits are tricky to introduce but are not by any means voodoo economics. I think a flat tax would encourage people to work more at the higher end of the spectrum and also drastically reduce the cost of collecting taxes and the amount of tax evasion. But it would be hard to sell to the public, as are many economically valid ideas like free trade.

Chipboard

OfflerCrocGod wrote:

Do you come from planet Vodoo economics? "tricky to introduce!" talk about understatement........ :rolleyes:

Actually both Moore McDowell and Dan McLaughlin have both written articles in the papers in recent times backing up the argument that one tier income tax system would work and would be far easier to administer than the current system.

The main argument for having two income tax rates is that high income earners should pay more tax and thats fair enough. However, in Ireland all the tax breaks mean that only the little guy pays tax. If you earn more than €500k in Ireland you dont have to pay tax if you have a good advisor. One income tax rate and no capital allowances would solve this but it will never happen. Fianna Fail are completely in the pocket of big business. They even have a club with a hefty membership fee for businessmen to join to give them access to TD's/Ministers.

By the way, the above economists estimate that if you abolished capital allowances, an income tax rate of 17 - 19% would be sufficient to raise the same amount of revenue gather presently.

daveirl

This post has been deleted.

OfflerCrocGod

Chipboard wrote:

Actually both Moore McDowell and Dan McLaughlin have both written articles in the papers in recent times backing up the argument that one tier income tax system would work and would be far easier to administer than the current system.

Ummm I don't think either you or defiantshrimp understood what I was talking about....Yes the flat tax system is easy to administer and to pay tax for; the problems I was referring has nothing to do with the ease-of-use of the system. It has to do with the consequences of the system and who would end up taking the brunt of the changes; the rich will pay less and the middle-class will be slowly worn away and pushed down to become the lower class. Replacing our tax system with flat tax will mean we end up with a shortfall in revenue so our social system has to pay the price and off course the users of the system are the lower and middle classes i.e. the ones who pay more under the flat tax. Actually the BBC had a good report on it in newsnight. 17% is FAR to low. 25% is closer to reality.

OfflerCrocGod

Here is an article on the UK Treasuries opinion on flat tax.

They concluded that claiming general economic improvements would spiral from the highest to low and middle income earners would require “heroic assumptions.”

Ummmm, sounds like a good idea!