Sir, – As each party manifesto has been published, it has become abundantly clear that almost every party standing in the election is proposing to reduce income taxes, especially for those on less than average incomes. For all the praise of the Nordic model by some in our politics, none of them are suggesting that those on lower incomes should pay what those on lower incomes pay in Nordic countries, which is roughly 25 per cent of their income. In Ireland, it is much closer to 10 per cent.
A number of parties have proposed funding these reductions in part by increasing taxes on those who are earning higher than average incomes. While this may well prove to be very popular, with far more people on lower incomes than higher ones and advocated for on the basis that the cost of many basic goods and services have increased substantially over the last three to four years, it is making the public finances ever more dependent on the job security of an ever smaller number of PAYE workers.
Just 11 per cent of taxpayers are paying 64 per cent or about €2 out of every €3, and 1 per cent of taxpayers are providing 24 per cent of all income tax. Those workers are in highly mobile jobs, roles that were readily converted to working from home during the pandemic, as we could see from the minimal effect that the pandemic had on the State’s revenue from income taxes, despite many people having to temporarily leave the workforce overnight.
Just imagine for a moment that one in 10 of that 11 per cent lose their jobs – that’s a 6 per cent drop in the State’s income tax overnight. And perhaps one in three of those highest earners decide to leave or their employers decide to relocate, that’s another 8 per cent of income tax gone. That’s 14 per cent, or €1 in every €7 that the State gets from income tax, gone by the elimination of only 1.3 per cent of workers.
Yet all anyone talks about is likely reductions in corporation tax, as if our income tax stream is somehow unrelated to changes in those same corporations.
The progressive income tax pyramid is teetering closer and closer to a point where even the slightest economic shock will undermine the public finances in a catastrophic manner. No one will get any votes in playing the role of Cassandra and highlighting the need to rebalance the tax pyramid. And yet it remains true. – Yours, etc,
DANIEL K SULLIVAN,
Marino,
Dublin 3.
Sir, – Please forgive my pessimism, but I fear that if even half of the promises contained in the various party manifestos are actually honoured, irrespective of the make-up of the next coalition administration (for it will be a coalition government), the return of the dreaded troika is a very real possibility. All it takes for such a scenario to come to pass is for a drastic downturn in global economic activity to take place; it happened before and it can happen again.
Given the fact that this country is so reliant on tax receipts from a relatively small number of big multinational companies operating here, for any government to be so egregiously flaithiúlach with the contents of the State’s coffers in such a time of uncertainty would be nothing short of a gross dereliction of its fiduciary obligation to every man, woman, and child in this country. – Yours, etc,
PAUL DELANEY,
Dalkey,
Co Dublin.
Sir, – It seems clear at this stage that our next government will be a coalition. As soon as the results are known, the negotiations will begin. The promises made by the parties involved will be negated, altered or simply forgotten about. As for the promises of those who end up in opposition, well, what use are they? When is a promise not a promise? – Yours, etc,
RICHARD ALLEN,
Cummeen,
Sligo.