Upcoming Election Campaign must tackle lies on Tax from hard left and Sinn Fein.
Fine Gael Dublin MEP, Brian Hayes, speaking this evening at a public meeting on Tax in Ballinteer, Dublin, said that the upcoming election campaign must be about tackling the distortion about the PAYE tax system that the hard left and Sinn Fein keep peddling.
“Parties of the Left believe that all our problems can be solved by a very large tax increase on those earning more than €100,000. The difficulty with their suggestion is that we don’t have enough people earning that level of income. Of the 2.1 million taxpayers, just over 103,000 cases, or 5% in total, have gross incomes over 100,000. Pretending that 5% are going to solve all the expenditure and tax plans promised by hard left politicians in an election campaign is populist nonsense.
“Our income taxation system is progressive. The more you earn the more you pay. In fact internationally, we have one of the most progressive tax systems in the world. For instance the top 5% pay 20% of all income tax gathered. The real problem in the Irish tax code lies at where people on very average pay are taxed at the top rate. That must be the priority for reform in the years ahead. It cannot be resolved overnight.
“In a globalised world human talent is the most precious resource of all. Irish graduates across all disciplines are welcome all over the world. Our graduates have a good reputation for hard work and high levels of performance. Ireland’s very high personal tax rates are contributing to a graduate brain drain.
“The same high tax rates are also a hindrance to Irish emigrants with overseas experience wishing to return home and are a severe hindrance to attracting talented people to come to live and work in Ireland.
“Ireland has one of the highest marginal tax rates in the world for single people. The figures are very stark. Single people hit the top rate of tax in Ireland at €33,800. In the UK it is €183,285, in France it is €186,749 and in Germany it is €259,100.
“To take some examples – an employee on €75,000 in the UK pays €22,000 in tax while the same employee in Ireland would pay €27,000 – a difference of €5,000 per year. On a salary of €150,000 – in the UK there is a tax bill of €59,000, while in Ireland it is €66,000.
“In devising our income tax system we have to be aware of our international competitors because labour is so mobile today. The truth behind the very high rates of marginal tax in Ireland is that we are out of sync with our global competitors. If we want to remain competitive and have an open labour market which can attract talented people to Ireland, we must be conscious of how other countries, especially in the EU, tax their citizens.
“During the past seven years many young Irish people were obliged to emigrate to find work. However a study published by UCC in 2013 showed that almost 50% of young Irish emigrants had a job before they left. In particular there is strong anecdotal evidence which indicates that Ireland’s high levels of personal taxation are an important factor in the decision of many highly qualified young professionals to emigrate including many of our expensively trained young doctors.
“If Ireland is to prosper and compete in a rapidly changing world then we must have a tax system which will retain and attract the best and the brightest. Rates of tax on single people in Ireland are punitive compared to our competitors. High taxes and very high rents, especially in Dublin, are a barrier to young people wishing to move back to Ireland.
“Tax policy is an important element of any strategy focused on keeping our young graduates working in Ireland and attracting home recent emigrants. It costs in the region of €300,000 euro to raise and educate a young person to graduate level. That’s an extraordinary investment by the Irish state and by Irish families.
“Emigration represents a terrible loss of human capital. The national interest is served by keeping our young people working and living in Ireland. Young people were hit hard by the recession. As the recovery takes hold their interests must be taken into account in devising a fair and proportionate taxation system. Simply increasing tax on labour is bad for the economy and bad for the recovery now thankfully underway.”