Ireland has a new taxation troika of a welfare trap, a minimum wage trap and a higher marginal rate trap which is acting as a barrier to progress. There is enormous evidence that high marginal tax rates on low incomes acts as a disincentive to work. What are the economic benefits of a flat tax? A single worker on an average income of about €34,500 pays about €13,000 in income tax and social insurance contributions in Denmark, compared to over €6,000 in Ireland a difference of over €6,500ģ. At average income levels we are the 15th highest in OECD.
How do Irish taxes on low earners compare internationally?Īs PublicPolicy.ie point out, the tax paid by a single person on half average earnings (average earnings are just under €34,500) in Ireland is the second lowest in the OECD (out of 34 countries) and is about one-tenth that in Denmark. Every year, the Revenue Commissioners are forced to spend hundreds of millions to administer the various elements of our taxation system.Ī flat tax simplifies everything, reduces the bureaucracy and red tape, and gives the taxpayer and the tax collector certainty over what will be paidĢ. Irish workers open their payslips on a monthly basis not knowing how much will have been taken from them and why. Our tax collection system is also cumbersome and costly. Across Ireland, normal people on modest incomes of between €30,000 and €70,000 are taxed at the highest rate in the system. The vagaries of the system mean that some people can actually earn less money when they work more hours. In any functioning economy, work and endeavour should be encouraged, but our tax system does the opposite.
This has created the scenario where our recovery has been export led and jobs thin.Īllied to this there are two main problems with Irish income taxes: they are too high and they are too complicated.Īs things stand, through income tax, PRSI and USC, Irish workers are strongly disincentivised to work harder, take on more hours, or move from part-time to full-time employment. Ireland’s high taxes on middle income workers are hampering job creation, the domestic recovery, real job creation and consumer confidence.
What is the case for the radical decision to change to a flat tax? Make Ireland an attractive place to workġ.Take people out of the welfare/poverty trap.
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