Login

Money Times - October 2, 2018

Posted by Jill Kerby on October 02 2018 @ 09:00

WILL YOU BE BETTER OR WORSE OFF THIS BUDGET DAY?

The day after the Budget, which is next week, on November 9, tens of thousands of people who long ago stopped buying the print version of a national newspaper will pick one up at their corner shop.  They will do this because of the tax case studies that appear in all the papers that work out how better or worse off they will be as ‘the single worker’, ‘the lone parent’, ‘the married couples with/without children’ and ‘the pensioners’.

This month also marks the beginning of the great financial crisis, and during the immediate post-crash years the Budget supplements should have incuded a banner headline over those pages warning readers, ‘Give up hope all ye who enter here’ such was the depressing outcomes.

From 2009 to about 2013 income thresholds fell, landing many more earers into paying more income tax on lower incomes. The emergency tax, then the universal social charge (USC) was introduced that slashed average gross incomes by another c7%  and all sorts of discretionary taxes and sneaky levies were added.

Some levies weren’t very sneaky at all, like the higher pension contributions that public service workers had to make and the private pension fund levy which permanently confiscated  €2.6 billion worth of retirement savings from nearly 800,000 private pension fund holders. (Is it any wonder pension membership has been falling steadily since then?)

Next Tuesday’s Budget isn’t expected to be a slash and grab one, but with a budget deficit to clear and with Brexit on its way, there probably isn’t as much leeway for tax cuts and welfare giveaways as the Finance minister (or his backbenchers) would have liked. 

With local elections coming soon and maybe even a general election on the near horizon, buying votes via a tax cut and lobbing a few more euro onto old age pensions and child benefits is an essential re-election tool.

I’m certainly looking forward to seeing how the Minister for Finance fulfils that unofficial mandate. He has already made clear that he has more pressing bills to pay – like health service overruns, and pay equalisation for civil and public servants.  He and the Taoiseach also keep repeating that they don’t plan to make the same stupid spending and fiscal policy mistakes that has scuppered growth periods in the past.

So what should we expect next Tuesday?

I don’t have a crystal ball, and there haven’t been as many leaks as in previousyears (though the hospitality industry is probably going to lose their 9% VAT rate) who why not just remind ourselves how much tax we do pay and who pays the most.

‘Widening the tax take’ is an expression that is gaining traction. Even the government’s advisors on the Fiscal Council and ESRI keep reminding them that while the Irish tax system is very distributive, with higher rates ot income tax payable at one of the lowest earning thresholds in the EU of just €34,500, the numbers of earners outside the tax net is much larger than in other countries. USC also rises substantially for higher earners moving up to 8% and 11% on incomes over €70,044 and €100,000 (only for the self-employed) respectively.

An excellent pre-Budget submission by the Irish Tax Institute last month and is well worth downloading if you really want to put the Minister’s speech next week into context. (See www.taxinstitute.ie  Budget 2019 Submission, Chapter 5).

The report shows just how much of their incomes Irish workers are still handing over to the State a decade later. Despite what has been celebrated internationally as the most successful economic recovery of all time…

-       Every single category of income earner has lower take-home pay in 2018 than in 2008 when the crash happened or in 2012.

-       Tax increases have lowered take home pay between 2008 and 2018 between -3% for people earning just €18,000 to -10% for someone earning €150,000.

-       Someone earning €55,000 is still €1,550 worse off in 2018 than they were in 2008.

-       The top 26% of earners, with incomes over €50,000 will pay 85% of all the total income tax and USC collected in 2018.

-       The top 7%, with incomes over €100,000 will pay 53%; while the top 1% with incomes over €200,000 will pay 28% of all the income tax and USC.

-       The Tax Institute estimate that in 2019, 941,600 people, or over a third of income earners (35%) will pay no income tax and 28% of them will be exempt from USC;

-       Only 1,781,500 people will pay income tax in 2019:  595,900 will pay tax at the marginal rate of 40% and 1,186,000 at the standard rate of 20%.

 

Letters to jill@jillkerby.ie  The TAB Guide to Money Pensions & Tax 2018 is available in all good bookstores. See www.tab.ie for ebook edition.) 

 

18 comment(s)

  1. Heinrich Jack
    We offer private and commercial loan finance for early stage startups in the preferential interest rate of 2% per year. Contact us via email: (heinrichsjacks15@gmail.com) if you are interested for more information. Thank you. Mr. Heinrich Jack.
  2. http://photoboothwinnipeg.com on Apr 14 2019 14:36
    Quite an interesting discovery, I'll for sure be looking more into this and taking some action.
  3. Spiderman hoodie on Jun 29 2019 07:40
    This is an excellent post I have seen thanks to sharing it. It is really what I wanted to see hope in future you will continue for sharing such an excellent post.
  4. Spiderman Jacket on Jun 29 2019 12:43
    The information you have provided is very helpful at all thank you very much for sharing useful information with us.
  5. Ujackets on Jun 29 2019 12:58
    This blog is great. I have found profitable information from this blog. I like its comments. thanks for info.
  6. cyberpunk jacket on Jul 10 2019 11:52
    Amazing post
  7. home tutor in karachi on Jul 16 2019 16:05
    Amazing article and very helpful its a great site.
  8. Halloween Jacket on Jul 20 2019 07:34
    It's great to see this post. I really appreciate your work
  9. jacobmoob on Jul 26 2019 10:57
    This blog is great. I have found profitable information from this blog. I like its comments. thanks for info.
  10. "Ashley Madekwe Jacket " on Jul 26 2019 12:12
    his blog is great. I have found profitable information from this blog. I like its comments. thanks for info
  11. Top Gun 2 Jacket on Jul 30 2019 10:10
    This is a great start. You need to work on your grammar and spelling. use sms texting language such as LOL etc Also a blog is not a news report. It either describes a.
  12. Nathan Parsons Roswell New Mexico Black Jacket on Aug 03 2019 10:01
    Nice and interesting post,I appreciate your hard work,keep uploading more, Thank you for sharing valuable information
  13. Bomber Leather Jackets for Men on Aug 28 2019 11:13
    Very nice post and an amazing sharing! Looking forward to this valuable post!
  14. Elton John Denim Jacket on Sep 10 2019 08:54
    Your best bet for free online no download games are flash games. Try looking up armor games.
  15. artificial flower arrangements on Oct 24 2019 08:30
    The staff are so helpful. They also have the best prices and the best quality. I go to International Silk Flowers almost every other week. I was shopping for my business at first but now for my home. I love this place.
  16. mapo tofu on Oct 24 2019 08:40
     Sichuan style recipes are my favorite due to the spicyness. Though i do love the beijing style cooking. I just love spicy. Mapo tofu is one of my favorite.
  17. >Wholesale Phone Cases on Oct 24 2019 08:41
    we have been buying iphone & other cell phone from these guys for years and never had any issues. their products are of high grade and they deliver on time.
  18. leather jackets on Oct 31 2019 11:57
    No matter where you are, we want you to feel perfect every time you go out with your friends and family. We want you to feel comfortable and relaxed, while enjoying the style and snuggle fit. To ensure this value, our Jackets are given full attention and care. We make sure our quality is top notch and satisfactory, because we give care and attention to our customers needs and desires.
Leave a comment
 

Subscribe to Blog