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Ireland's total tax-take remains among lowest in EU
The latest edition of 'Taxation Trends in the EU' (published June 16, 2014) shows that once again Ireland’s total tax-take is one of the lowest in the Union. It now stands at 28.7% of GDP compared to an EU average of 39.4%. It is clear that if Ireland is to aspire to services and infrastructure at an EU-average level then it must move its total tax-take towards that EU average.
The overall tax-to-GDP ratio, meaning the sum of taxes and compulsory social contributions as a percentage of GDP, in the EU28 has risen to 39.4% in 2012, from 38.8% in 2011. The overall tax ratio in the euro area (EA18) increased to 40.4% in 2012 from 39.5% in 2011. In 2013, Eurostat estimates show that tax revenues as a percentage of GDP are set to continue rising in both zones.
The total tax-take varies significantly between Member States, ranging in 2012 from less than 30% of GDP in Lithuania (27.2%), Bulgaria and Latvia (both 27.9%), Romania and Slovakia (both 28.3%) and Ireland (28.7%), to more than 40% of GDP in Denmark (48.1%), Belgium (45.4%), France (45.0%), Sweden (44.2%), Finland (44.1%), Italy (44.0%) and Austria (43.1%).
To move Ireland’s total tax-take towards the EU average, Social Justice Ireland proposes that Budget 2015 should:
· Maintain 3% USC levy and extend it to all income in excess of €100,000 irrespective of its source
· Introduce tax on products high in sugar and trans fats
· Increase the tax take from gambling Increase the PAYE credit by €5 per week
· Standard rate the tax break on all pension contributions(and use the money gained to fund a universal pension)
· Standard rate non-pension discretionary tax reliefs costing more than €10m per annum
· Remove tax refund element for unused R & D credits
· Introduce a minimum effective corporate tax rate of 6%
· Introduce a Financial Transactions Tax
· Introduce a tax on empty dwellings and undeveloped land in urban areas.
More information on these and related proposals are available in Social Justice Ireland’s Policy Briefing on Budget Choices 2015.