| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Irish Economy Last Updated: Aug 27, 2014 - 10:38 PM


Irish Budget 2015 & Economy: More demand for tax cuts
By Michael Hennigan, Finfacts founder and editor
Aug 21, 2014 - 8:21 AM

Email this article
 Printer friendly page
ESRI Budget Perspectives 2014 [pdf]

Irish Budget 2015 & Economy: The renowned American baseball player Yogi Berra (b. 1925) once quipped "It's déjà vu all over again" and there is that sense about the continuing drumbeat of demands for tax cuts in next October's budget.

The chart above shows that there is a need to adjust Irish income tax bands as the top rate threshold is at a low average income level. However, just in the past 24 hours Dermot O'Leary, chief economist at Goodbody, called for a cut in the 52% top rate of income tax (including social charges) that applies to an individual's taxable income above €32,800 as part of measures to "increase the medium-term potential of the economy" while the Irish Times reports that a tax relief for landlords that was phased out after the collapse of the housing market should be reintroduced to help tackle the student accommodation crisis, UCD Students’ Union has said.

Dermot O'Leary's claim that "the higher rate of tax...including the universal social charge, is one of the highest in the EU" is not correct as the chart above illustrates and while the top headline income tax rates of 40% and 45% in the UK, suggest that Ireland is out of line, when the incremental loss of the personal tax allowance and a total loss kicks in at £120,000+ earnings coupled with benefit impacts, the effective UK marginal tax rate is 60% (including national insurance).    

Last month Ibec, the principal business lobby, produced  a laundry list of new business tax breaks despite Ireland having the lowest corporate tax and employer social security rates in Western Europe.

Remember the magic of low taxes and how the gallery of fools argued that the halving of the capital gains tax rate to 20% had more than doubled the revenue take?

That was ostensibly true just as a gambler can sometimes win in the casino.

It was the time when  Maurice O'Connell, Central Bank governor, was issuing letters to bank chiefs pleading for credit restraint.

We reported last month that the Bank's 1999 annual report noted: "Institutions were...advised that it remains vitally important for them to take a medium term perspective and to reckon with the potential consequences of rising interest rates and a return to lower rates of growth in the economy. All institutions gave assurances that there would be no slackening in prudential lending standards."   

It doesn't take much wisdom to understand that cutting taxes is easy while increasing them is very difficult - - Jean Baptiste Colbert (1619–83), a French finance minister during the reign of King Louis XIV reputedly said: "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing."

Absent a boom, there is a limit too to the scope for raiding pension funds (Kenny and Noonan are each entitled to draw 3 public pensions) and the like.

EU tax/ social security burdens

Last June Eurostat published the 2014 edition of 'Taxation trends in the European Union' [pdf] which details EU tax & social security burdens in 2012.

Ireland is a middle ranking tax country.

Tax & social security revenue as a ratio of GDP was 28.7% in Ireland and 35.2% of GNP (gross national product) -- mainly excluding the inflated profits of the significant foreign-own sector.

The ratio was more than 40% of GDP in Denmark (48.1%), Belgium (45.4%), France (45.0%), Sweden (44.2%), Finland (44.1%), Italy (44.0%) and Austria (43.1%).

The UK was at 35.4%.

In Ireland with a dual public-private health care system, the cost of private health insurance can also be viewed as a tax.

Besides debt reduction over time, the public capital budget has taken a big hit since the economic bust and while project management has been poor in the past, there will be a need for more spending in coming years.

Labour costs

In 2013, average hourly labour costs in the whole economy (excluding agriculture and public administration) were estimated to be €23.7 in the EU-28 and €28.4 in the Eurozone (EA-17).

The Irish rate was €29 compared with €30.5 in Germany and €20.1 in the UK.

Irish prices are about one-fifth higher than the EU average despite being the only economy to have experienced an actual price fall in 2008-2012.

There are two economies in Ireland and the foreign-owned exporting sector and its eco system with knock-on impacts on public sector charges, contrasts with the typical private sector worker who is an indigenous SME, is not a trade union member, is low paid and has no occupational pension. 

A government minister has promised to review public service austerity era pay and pension cuts but with silence on pay rises in the private sector, there is the promise of cake!

Recent reports on the economy:

Davy

Goodbody [pdf]

Related Articles
Related Articles


© Copyright 2011 by Finfacts.com

Top of Page

Irish Economy
Latest Headlines
Finfacts launches new news site
Irish Farmers & Milk Prices: 'Shackles' off in April; Demanding safety-net in August
Irish pension managed funds returns at over 12% year-to-date in 2015
Irish chartered accountants' salary packages surge 13% in 12 months
Irish services PMI fastest rate since late 2006; Official data up only 2.4% in 12 months
Irish Economy: Tax €893m above target in year to July — €653m from corporation tax
Fact and Fiction: Time to review Ireland's economic statistics?
Irish M&A deals H1 2015: Dutch or UK firm acquires Irish firm for €32.6bn - they are both American
Irish manufacturing PMI strong in July
Irish Economy: Fall in GNP in Q1 2015; GDP rises
Irish Economy 2015: Central Bank lauds strong recovery; Time to start paying down debt
Irish Budget 2016: Ibec demands 20 tax cuts, spending and investment rises
Low pay in Ireland; Lowest social security & corporate taxes in Europe
Ireland vs Greece: Enda Kenny's false claims on growth, taxes and debt
Irish standard of living in 2014 below Euro Area average, Italian level; Prices 5th highest in EU28
Irish goods exports rose a record 30% in April - due to fake tax-related transactions
Mexican tall ship to sail into Dublin on June 17th
Irish industrial production up 20% in first four months of 2015; Construction down 2.6% in first quarter
Irish Economy 2015: ESRI slams return to boom-time pro-cyclical fiscal policy
Irish pension fund returns in average range 1.6% - 1.8% in May 2015
Irish service sector PMI remains strong; Tax avoidance clouds data
Ireland: Official unemployment rate at 9.8% in May; Broad rate at 19% — 440,000 people
Ireland: Fiscal Council warns of dodgy forecasts, no plan; OECD warns of new property bubble
Irish Public Finances: Tax revenue in first five months of 2015 €734m ahead of target
No simple measure of economic progress in Ireland: GDP & GNP defective
Irish manufacturing PMI rises in May; Production up unbelievable 45% in year to March!
ESRI says data volatility hinders Irish economic forecasting; Tax avoidance taboo cause
Ireland at 16 in international competitiveness ranking; US, Singapore and Hong Kong on top
Irish Economy 2015: Sectors to add 200,000 jobs?; Broad jobless rate at 19%
Irish Export Performance: Myths and reality - Ireland is a poor exporter
Irish Economy: 41,300 jobs added in 12 months to Q1 2015 - Construction up 19,600
China-Ireland: Economic relationship on a slow burn
Estonia, Austria, France, Ireland head global alcohol rankings
Irish Exchequer Returns: Tax receipts under target in April but ahead in year
Irish service sector PMI rose in April
Irish manufacturing PMI remained strong in April- includes overseas manufacturing
Irish Live Register + 90,000 activation scheme numbers at 439,000 in April
Ireland: Coalition drops 2018 full-employment target
Ireland Spring Statement: Noonan promises 200,000 net new jobs by 2018
Irish Economy 2015: Retail sales volume up 1.4% in month of March