RTÉ’s Prime Time last night was a discussion on tax. Reporter/presenter Mark Little repeated several times Noel Dempsey‘s (and the Government’s) claim that “38% of people pay no tax at all”. That’s rubbish.
38% of people pay no income tax. But they all pay tax.
Feel Familiar? (from topnews.in)
VAT, or sales tax, is paid by everyone, without exception. While individual transactions or products may not have VATs (sinfully, stud farm fees have no VAT, but electricity and heating oil do), everyone from the widow on a couple of hundred euro a week to the Brian Goggins of this world on his measly “less than €2m” per year (that’s €38,000 a week in old money) pays VAT. That 38% who pay no tax includes those on pensions, disability allowances, single mothers, full time carers, etc, etc.
Pity the Rich
The next step in that argument from the Government is that the top one third of people pay two thirds of income tax. Which Noel Dempsey implied is almost unfair on them. It’s only unfair on them if they earn less than two thirds of the total income! In fact, it’s really only unfair on them if they earn less than two thirds of what we could refer to as the “income above subsistence”.
What we need to know is what each decile of the workforce earns, and what it pays in tax. If the top decile (i.e. the top 10% of earners) earns one third of all income, as I would predict, then it’s perfectly fine in my mind for them to pay at least one third of the income tax take. Despite a bit of cursory research this morning, there doesn’t seem to be any recent statistic available on this. (I’m working on getting it off the Government.)
Look before you Leap
So let’s see the full picture. Before we go tinkering with the tax system, let’s know not just who pays what proportion of the income tax take, but what proportion of their income that is. Only then will we know if the changes that will come about in the new Mini Budget (which, by the way, I predicted back in October) are fair and if everyone’s paying their share.
Why do I get the feeling that the builders and bankers will pay little, and those on average incomes will get hit hardest?
