widening the tax base - the negative effects

The various ministers for Finance over the last 10 to 12 years have sought to widen the tax base.
They have done this to ensure a constant revenue stream to Government even when the economy slows.
I think they did this because they identified all the fixed costs in running the country which must be paid regardless.

By widening the tax base I mean they intentionally introduced taxes, hidden and visible, in budgets and outside budgets over the last decade.
I’m talking about things like new stamps, rubbish collection, preparatory work for water rates, etc…
I have correspondance from Cowen as Minister for Finance point blank refusing to abolish a stamp duty on motor insurance tax which FF implicity promised to abolish in the 2002 election because it was there to widen the stamp duty base.

I note two things here:
Government have got a relatively steady revenue so don’t have to address over-staffing, quangos and can ignore the advice of Comptroller and Auditor General. The top civil servants helped direct taxation policy over this period to ensure there would always be money in the pot to pay their wages.

When people start being thrown on the dole in their thousands it’s going to hurt them badly as the wider tax base means that they keep paying taxes even though their income has disappeared. In the past when you stopped getting income you stopped paying income tax and that was the end of it.

Discuss! : )

Good post. Vat surely would be the catch all tax would it not.
Employed, unemployed rich or poor you still pay it.

Yes VAT is a biggey and it is on stuff it used not be on.
VAT on ESB, Phone, Tolls and I’m sure Water will be another service that is deemed a luxury which we should pay VAT on.

The other thing is the Government keep saying we have to implement this VAT because it is demanded by the E.U. but I don’t see the E.U. demanding VAT to be levied at 13.5% adn 21% on necessities.
Th3 21% rate could be 15% and we’d still be keeping the E.U. happy.

Another point here:
The concept of equity in our taxation system is a point which is lost on our mandarins.
I remember having an arguement on the phone with a civil servant in Revenue about stamp duty on motor insurance and his opinion was “the bills have to be paid”. I was making absolutely no milage with the argument that Yes, bills have to paid but they should be collected fairly, proportionately and that there is a social and economic theory behind how taxes should be levied to further the good of society.

VAT rates are 7% and 16% here (spain) - and the lower rate applies to a lot more things that you’d think.

The main design goal of the irish tax system is to be gentle on mobile sources of tax revenue (e.g corporations, petrol), and harsh on those that cannot avoid it (VAT, VRT etc).

BTW, i just got hit for €9 on a parcel sent from the US to ireland (total value was ~€46)- i haven’t seen irish customs chase up anything under €50 in a long time - things must be getting tight.

ragingbear, was the parcel sent via FedEx?

UPS i think. I guess that might have something to do with it, since it’s been a fair long time since i last sent something from the US with them.

Did they make some change now that the courier is liable for customs charges it or something like that?

There is a myth peddled out there that Ireland is a low tax economy. It isn’t.

When pressed on it people who claim this will sometimes moderate what they are saying to claim it’s a low income tax economy, which is still not true.

When you factor in the relatively low level at which you hit the time rate of tax, the fact that the top rate is 41% (not a trivial amount) and you add in PRSI, and over 10% Employers PRSI.

Don’t kid yourself, employers PRSI is tax YOU PAY, not the employer. An employer works out what he can pay to employ you, he doesn’t particularly care whether the money goes to you or to the government, it’s all part of the cost of giving you a job.

Every pay rise you ask for translates into a 10% bigger figure in his head.

On top of this high level of tax on employment, there’s also the myrad regressive taxes soem of thich were mentioned above.

FFs love of regressive taxes over the last few years makes a joke of Bertie Ahearn’s claim to be the last socialist in the dail.


I’m of the opinion those regressive taxes will be more painful for everyone when 100,000s of workers income drops to under 20K from over 50k which is what it was during the boom years.
I’m of the opinion that those taxes that just won’t go away when your income goes away are the ones that will cause the marital breakup and suicide.
People can adjust to living more modestly, they can’t adjust to have having more money going out than is coming in.

Absolutely right. The marginal tax rate is 41% PAYE + 2.5% health levy + 10.75% employer PRSI = 54.25%. There are even some muppets calling to remove the cap on employee PRSI contributions which would bring the total marginal tax on work to 58.25%. That’s the sort of punative tax rate you levy on something you want to stamp out, not encourage!

Ahem the thing is two-scoops you realise this but the idiots that call for it dont. also 41% paye+ 6% prsi + 10.75% employer prsi = 57.75%. The term greedy bas****ds springs to mind.

Slightly off topic but the figure I’m told to use as an actual cost of employing someone is 61% on.
I.e. Employing someone at €20/hr actually costs €32.20 and all bills going out should cover this.