Ireland's total tax-take remains among lowest in EU

Posted on Monday, 16 June 2014

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.

Taxation Trends in the European Union may be accessed here.