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Now is the time to increase Ireland's total tax-take

According to the Central Bank, Irish households are now wealthier than they were at the height of the Celtic Tiger. By the end of 2017, the net worth of Irish households* had risen to €727bn, just above the previous peak of €720 billion reached ten years earlier, and almost 70 per cent higher than the post-crash low of €430bn which occurred in 2012.

This strengthens the argument for an increase in taxation towards the EU-average, and a broadening of the tax base. Despite being among the richest countries in the world, Ireland is experiences multiple social crises and infrastructural deficits, including:

These problems, and many others, occur because of a taxation policy which has seen Ireland's tax tax as a percentage of overall national income falling for several years. Worrying, it is projected to continue to fall over the coming years. We cannot close the deficits in services and infrastructure between Ireland and our EU-15 peers while continuing to collect (and correspondingly spend) far less on them.

Below is a table showing the per capita tax take of the EU-15 countries in 2016. (Source: Eurostat)

Comparisons of taxation to national income (whether GDP, GNP or GNI) are problematic for Ireland, for reasons that are well-documented. If we look at Ireland's tax take on a per capita basis, and compare ourselves to our peer countries, we see that if Ireland were to set a per capita tax target of €15,000**, we would remain below the average and the median among the EU-15 countries. Social Justice Ireland believes that such a target is both achieveable and desirable.

Ireland needs to increase and broaden its tax base by €3bn to keep exchequer funds safe through uncertain economic times, fund decent public services such as for children and older people, upgrade ageing national infrastructure such as our water pipes, and to ensure Ireland becomes a fairer and more equal society in the future. The money can be raised from measures such as:

  • A minimum effective corporate tax rate;
  • A financial transactions tax;
  • Increased environmentally friendly taxes; and
  • Increasing the minimum effective tax rates on high earners.

These are just some of the ways that this can be done, though in truth, Government has an even wider range of options open to it, which can be viewed here.

*Household net worth is calculated as the sum of household housing and financial assets minus their liabilities.

**By per capita taxation, we mean the total tax collected by government from all sources, including corporation tax, VAT, income taxes, excise duties and others, divided by the total population.