Tax USC cuts and or Public sector pay

draiochtanois

This post has been deleted.

Godge

draiochtanois wrote: »

This post has been deleted.

Why would it be better spent on cutting tax and USC?

You could argue that because private sector earnings are rising, then social welfare and public sector pay should be increased.

The Bishop Basher

Godge wrote: »

You could argue that because private sector earnings are rising, then social welfare and public sector pay should be increased.

We tried that before. Didn't end too well...

Godge

Swanner wrote: »

We tried that before. Didn't end too well...

I didn't say that we should do that, I am just looking to understand why cutting taxes is better just like that.

Rightwing

Welfare and public sector should be cut, let alone increased.

However, the electorate went for the services. Little a Govt can do in the face of such downright stupidity.

Amerika

Will Ireland cease to be a tax haven for multinationals because of the EU commission’s order for Apple to pay back the Irish state €13bn in taxes? And will Ireland use much of that money toward helping the private or public sector?

Cookie_Monster

How about neither of the above combined with using the increasing funding on CapEx and debt repayment

strandroad

Rightwing wrote: »

Welfare and public sector should be cut, let alone increased.

However, the electorate went for the services. Little a Govt can do in the face of such downright stupidity.

Functioning healthcare, education, childcare, transport are services. Increasing cash welfare or paying the same number of public servants more are not.

Leave USC alone. Take a chunk out of income tax if you want to be seen to make inroads to the marginal rate.

USC is a big hefty ****er of a tax that takes in a lot of money mostly due to its simplicity and ability to negate 'tax planning'. If the marginal rate is a problem (it is) then reducing the income tax bands [whilst keeping USC as is] achieves that, without removing the much-hated-but-ultimately-extremely-useful USC.

Any 'fiscal space' for me should be used to take that marginal rate down, and then begin on some genuinely necessary and hugely economically sound public transport links in the capital.

No pay increases / welfare increases / taking people out of the 'tax net'. Some financially prudent fiscal stuff would be nice for a change. Instead of the rampant vote-buying that leads to difficulties time and time again.

Dardania

Deleted User wrote: »

Leave USC alone. Take a chunk out of income tax if you want to be seen to make inroads to the marginal rate.

USC is a big hefty ****er of a tax that takes in a lot of money mostly due to its simplicity and ability to negate 'tax planning'. If the marginal rate is a problem (it is) then reducing the income tax bands [whilst keeping USC as is] achieves that, without removing the much-hated-but-ultimately-extremely-useful USC.

Any 'fiscal space' for me should be used to take that marginal rate down, and then begin on some genuinely necessary and hugely economically sound public transport links in the capital.

No pay increases / welfare increases / taking people out of the 'tax net'. Some financially prudent fiscal stuff would be nice for a change. Instead of the rampant vote-buying that leads to difficulties time and time again.

I have wondered about an idea for a while that your post touches upon - whats the point in having income tax at all, when we could simply have USC account for all the income tax from people? If USC is as progressive as we are told that it is, surely it is a simpler and more fair system to tax people by.

Geuze

Yes, a retired Inspector of Taxes suggested to me: replace income tax with USC, i.e. expand USC and abolish income tax.

Dardania

Geuze wrote: »

Yes, a retired Inspector of Taxes suggested to me: replace income tax with USC, i.e. expand USC and abolish income tax.

It does feel simpler.

No doubt people would clamour to try transfer their allowances to it...

ThisRegard

I found these stats from todays Irish Tax Institute interesting, shows that our tax system can be claimed to be progressive, but it's still the middle Ireland that's paying most of the tax. I think it needs to be restructured somewhat.

I'd like to hear the left wing parties take on the report, I'm sure the clamours coming up to the budget will be to increase the state pension and other social welfare payments.

A worker on €25,000 earns almost 1.4 times the salary of a person on €18,000 but pays 5.6 times the tax.
A worker on €35,000 earns 1.9 times – but pays 10.9 times the tax
A worker on €75,000 earns 4.2 times but pays 44.1 times the tax
A worker on €100,000 earns 5.6 times but pays 65.8 times the tax
A worker on €120,000 6.7 times pays 83.1 times the tax

FreudianSlippers

ThisRegard wrote: »

I found these stats from todays Irish Tax Institute interesting, shows that our tax system can be claimed to be progressive, but it's still the middle Ireland that's paying most of the tax. I think it needs to be restructured somewhat.

I'd like to hear the left wing parties take on the report, I'm sure the clamours coming up to the budget will be to increase the state pension and other social welfare payments.

Here's the link for anyone interested: http://www.independent.ie/irish-news/we-must-take-stock-of-our-skewed-tax-system-and-ask-ourselves-if-it-is-even-fit-for-purpose-35063095.html


I have to say I agree with the article for the most part, although they fail to identify a suitable alternative.

For myself, I'd say that we should keep USC, fix the bands and harmonise self-employed rates.

Irish Times also covered it: http://www.irishtimes.com/business/economy/reform-of-warped-personal-taxation-system-almost-impossible-1.2797082

Godge

Godge wrote: »

I didn't say that we should do that, I am just looking to understand why cutting taxes is better just like that.

Cut the taxes and more money is spent.
There are many folks paying hundreds in USC every month and if they weren't paying that they wouldn't be saving it.

Increasing social welfare shouldn't be a priority as we've had no inflation to mention for quite a while.

Dardania

Dardania wrote: »

I have wondered about an idea for a while that your post touches upon - whats the point in having income tax at all, when we could simply have USC account for all the income tax from people? If USC is as progressive as we are told that it is, surely it is a simpler and more fair system to tax people by.

http://www.independent.ie/irish-news/politics/irelands-most-hated-tax-universal-social-charge-30804972.html

"The Universal Social Charge requires that everyone makes some contribution, however small, to the provision of services. This charge is separate from income tax which is levied proportionately as income increases," Lenihan argued in vain.

But because USC applies to gross income, and there are no tax credits allowed for it, more people pay it than pay income tax. Therefore, only 25pc of taxpayers are exempt from paying USC, compared with 36pc of workers who are exempt from paying income tax.

Happy for the rates to be played with, but abolition of USC is a poor call imo.

The first foray into widening the tax net in a century and we're seeing a step back from it now.

L1011

Any further reduction in the universality of USC is regressive. Even if its 1% across the board, the very purpose of it universal should have always been maintained. Nobody who is earning something is not using some services.

Suryavarman

The USC should be abolished and indirect taxes such as the property tax should increased to make up for the shortfall. A recent Department of Finance white paper showed that Ireland relies far more heavily on taxes on income to raise revenue than our European counterparts. It also showed that income taxes were the most distortionary after capital taxes. Property taxes were the least distortionary.

It's time we stopped shooting ourselves in the foot by overtaxing labour and start placing more emphasis on indirect taxation.

ThisRegard

Suryavarman wrote: »

The USC should be abolished and indirect taxes such as the property tax should increased to make up for the shortfall.

Which would result in basically the same group that are paying most of the tax now, paying most of the tax afterwards?

johnnyskeleton

L1011 wrote: »

Any further reduction in the universality of USC is regressive. Even if its 1% across the board, the very purpose of it universal should have always been maintained. Nobody who is earning something is not using some services.

It was brought in as a temporary tax. As was income tax, prsi etc.

Also, the fact that something becomes less progressive doesnt mean that the measure is regressive. Its that kind of thinking that has us on the path whereby some people pay most of the tax and some people pay none.

If it were truly universal incomes under 13,000 etc would be subject to it as well. Even if they only had to pay 0.1%, they would at least have to pay some tax and be part of the system.

MeatTwoVeg

It's not a binary choice, we shouldn't be cutting USC or increasing pay for the already overly remunerated PS.

Dardania

Suryavarman wrote: »

The USC should be abolished and indirect taxes such as the property tax should increased to make up for the shortfall.

This is a good idea - making local authorities responsible for their budgeting would mean people can have a greater impact on their local services.

Never going to happen however - outside of Cork, Dublin and I think Galway too, they all would require top ups...

Suryavarman

ThisRegard wrote: »

Which would result in basically the same group that are paying most of the tax now, paying most of the tax afterwards?

That's incorrect but even if it wasn't it's a better of doing it as it creates less distortion in the economy.

K-9

ThisRegard wrote: »

I found these stats from todays Irish Tax Institute interesting, shows that our tax system can be claimed to be progressive, but it's still the middle Ireland that's paying most of the tax. I think it needs to be restructured somewhat.

I'd like to hear the left wing parties take on the report, I'm sure the clamours coming up to the budget will be to increase the state pension and other social welfare payments.

The standard rate cut off point needs to be increased dramatically, people on the average industrial wage are paying the top rate of tax which is ridiculous.

No need to cut tax rate or USC, but that means politicians can't point to something simple and sexy in an election campaign!

chicorytip

How is it claimed that we in Ireland have a "progressive" and "equitable" taxation system when those who are earning the minimum wage pay no income tax whatsoever?

Zubeneschamali

chicorytip wrote: »

How is it claimed that we in Ireland have a "progressive" and "equitable" taxation system when those who are earning the minimum wage pay no income tax whatsoever?

Since no-one earns less than the minimum (by definition) they pay the least. That's what "progressive" means.

mickdw

But progressive is not the term id use where no usc is payable if earning under a threshold of 12k approx but usc on entire earnings is due if you earn a euro more than the threshold.
Crazy stuff.

ThisRegard

ThisRegard wrote: »

I found these stats from todays Irish Tax Institute interesting, shows that our tax system can be claimed to be progressive, but it's still the middle Ireland that's paying most of the tax. I think it needs to be restructured somewhat.

I'd like to hear the left wing parties take on the report, I'm sure the clamours coming up to the budget will be to increase the state pension and other social welfare payments.

All those numbers relate to tax on income, which is only about a third of the total tax take.

So when people say 'person on x pays y times more than person on z" you need to add the qualifier 'in taxes on income'.

No real surprise that the journalists in the Independent are too stupid to understand that not exactly complicated point.

chicorytip

Zubeneschamali wrote: »

chicorytip wrote: »

How is it claimed that we in Ireland have a "progressive" and "equitable" taxation system when those who are earning the minimum wage pay no income tax whatsoever?

Since no-one earns less than the minimum (by definition) they pay the least. That's what "progressive" means.

But they pay nothing at all! What's "equitable" about that? Everyone who is earning ought to contribute.

draiochtanois

This post has been deleted.

Cut income, raise spending....

K-9

mickdw wrote: »

But progressive is not the term id use where no usc is payable if earning under a threshold of 12k approx but usc on entire earnings is due if you earn a euro more than the threshold.
Crazy stuff.

That's just math though! If you move from paying no PRSI to the 4% rate you could end up with less money even with a pay rise, same from the 20% tax rate to 40%.

K-9

Deleted User wrote: »

All those numbers relate to tax on income, which is only about a third of the total tax take.

So when people say 'person on x pays y times more than person on z" you need to add the qualifier 'in taxes on income'.

No real surprise that the journalists in the Independent are too stupid to understand that not exactly complicated point.

But then people on higher income will tend to be the ones buying new cars, houses etc. so pay loads of VAT, stamp duty, VRT etc.

Put it this way, there isn't a specific VAT rate that targets lower incomes. Petrol taxes might hit somebody harder on SW or 15k a year because there income is limited, but somebody on 60k is paying 40% income tax, PRSI, higher USC and more VAT as they afford to buy more things.

VAT isn't something people can really avoid regardless of incomes.

mickdw

K-9 wrote: »

That's just math though! If you move from paying no PRSI to the 4% rate you could end up with less money even with a pay rise, same from the 20% tax rate to 40%.

Its not just maths, it's unfairly written tax rules.
The 20 to 40 percent rate doesn't operate as you say anyway. Income to a threshold is at 20 percent with remainder at 40 percent. If the law said that once income went over a threshold, all income would be at the high rate - that would be crazy but similar to usc.

Charles Babbage

This thread is typical fact free Boards nonsense. The public service pay rates were cut, because of a poor economy, that reason is no longer present and so they will be restored. This is only an increase if you look at the short term, compared to the longer term it is not.

The entire premise of this thread is that these things are a matter of opinion, when of course they should not be. You pay people the going rate, you ensure the going level of productivity (for instance by not having politicians fiddle with the pay rates on a basis other than performance) . You then decide the level of service you want and the taxes required for that. In Ireland, people, such as the OP, seem to regard all these things as independent, that you fix PS pay rates based on some bull**** about such people having to work for nothing or some politically derived figure because the government employs them, then you decide to have world class services, but not to pay for them.

The sad thing is that after a great recession, people seem to have learned nothing and seem proud to have learned nothing.

johnnyskeleton

Charles Babbage wrote: »

This thread is typical fact free Boards nonsense. The public service pay rates were cut, because of a poor economy, that reason is no longer present and so they will be restored. This is only an increase if you look at the short term, compared to the longer term it is not.

Maybe they rose from 1997-2007 because of a bubble economy with windfall taxes and the cuts were simply restoring them to closer to the long term average.

The entire premise of this thread is that these things are a matter of opinion, when of course they should not be.

This is democracy I'm afraid.

You pay people the going rate, you ensure the going level of productivity (for instance by not having politicians fiddle with the pay rates on a basis other than performance) .

How do you decide the going rate? For example, the bus drivers earning 600-800 per week wanting a raise. But if someone who is currently unemployed would do the job for 500 per week, surely the 500 is the going rate?

You then decide the level of service you want and the taxes required for that. In Ireland, people, such as the OP, seem to regard all these things as independent, that you fix PS pay rates based on some bull**** about such people having to work for nothing or some politically derived figure because the government employs them, then you decide to have world class services, but not to pay for them.

The OP said no such thing. But at present we are still borrowing to balance the books, have a large debt and an underfunded capital investment budget e.g. building roads etc. So in that sense we should neither cut taxes nor increase current expenditure but work on balancing our books. But that is not a popular option and the current government is in a very precarious position.

The sad thing is that after a great recession, people seem to have learned nothing and seem proud to have learned nothing.

I think youre underestimating peoples intelligence and overestimating them in another way. People know what should be done for the good of the country, but they also know that the government is weak at the moment so they can advance their private interests ahead of the national interest.

Geuze

draiochtanois wrote: »

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More capital spending is a very good idea.

But we now face fiscal rules meaning our public debt must fall, not rise.

By the way, we issued a 10 yr bond this month as part of regular debt issuing.

The yield was 0.33% approx, so we do borrow at those rates.

draiochtanois

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draiochtanois

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Godge

K-9 wrote: »

But then people on higher income will tend to be the ones buying new cars, houses etc. so pay loads of VAT, stamp duty, VRT etc.

Put it this way, there isn't a specific VAT rate that targets lower incomes. Petrol taxes might hit somebody harder on SW or 15k a year because there income is limited, but somebody on 60k is paying 40% income tax, PRSI, higher USC and more VAT as they afford to buy more things.

VAT isn't something people can really avoid regardless of incomes.

If the social welfare rates are high enough to allow a single individual on social welfare to afford a car, then there is something wrong with the social welfare rates.

There are many working families paying tax who can't afford a car.

draiochtanois

This post has been deleted.

K-9

Godge wrote: »

If the social welfare rates are high enough to allow a single individual on social welfare to afford a car, then there is something wrong with the social welfare rates.

There are many working families paying tax who can't afford a car.

Some people might need a car for any new job so would priortise that above other things.

Everybody is different, including those on SW.

draiochtanois

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Rightwing

Godge wrote: »

If the social welfare rates are high enough to allow a single individual on social welfare to afford a car, then there is something wrong with the social welfare rates.

There are many working families paying tax who can't afford a car.

Can they drive ?

Only a complete and utter dunce can't afford a car nowadays.

strandroad

Rightwing wrote: »

Can they drive ?

Only a complete and utter dunce can't afford a car nowadays.

Or someone who pays double childcare. Get real.

Rightwing

mhge wrote: »

Or someone who pays double childcare. Get real.

I'm not buying any of these hard luck stories.

Dardania

Rightwing wrote: »

mhge wrote: »

Or someone who pays double childcare. Get real.

I'm not buying any of these hard luck stories.

Your username is quite apt

Godge

Rightwing wrote: »

Can they drive ?

Only a complete and utter dunce can't afford a car nowadays.

Household Car ownership was only 82.4% in 2011.

http://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/saveselections.asp

A lot of your dunces out there.

Rightwing

Godge wrote: »

Household Car ownership was only 82.4% in 2011.

http://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/saveselections.asp

A lot of your dunces out there.

Does the article mention affordibility ? I doubt it, but I would say most of those punters wouldn't be fit to drive. Safer if they use the bus......for us all.

K-9

Rightwing, up the standard please.

fliball123

Charles Babbage wrote: »

This thread is typical fact free Boards nonsense. The public service pay rates were cut, because of a poor economy, that reason is no longer present and so they will be restored. This is only an increase if you look at the short term, compared to the longer term it is not.

The entire premise of this thread is that these things are a matter of opinion, when of course they should not be. You pay people the going rate, you ensure the going level of productivity (for instance by not having politicians fiddle with the pay rates on a basis other than performance) . You then decide the level of service you want and the taxes required for that. In Ireland, people, such as the OP, seem to regard all these things as independent, that you fix PS pay rates based on some bull**** about such people having to work for nothing or some politically derived figure because the government employs them, then you decide to have world class services, but not to pay for them.

The sad thing is that after a great recession, people seem to have learned nothing and seem proud to have learned nothing.

Sorry last I checked we were borrowing 2 billion this year and we are 206billion in debt..We have to pay that off so how are we out of reason why you guys got a pay cut?

So longer term where in the years between 2000 and 2007 ps pay and penisions more than doubled? yeah your talking absolute waffle