Thursday 23 October 2014

Cut VAT not income tax rates, think-tank urges

Published 14/06/2014 | 02:30

One third of income taxpayers are hit with the top rate of 41pc, independent think-tank Tasc has claimed.

It said the effective rate of income tax, insurance and Universal Social Charge (USC) is beneath the 51pc rate.

Workers are hit with the marginal rate of tax on income above €32,800 and raising that threshold is likely to be the focus of any cut in personal tax in the Budget.

Tasc said cutting the 41pc rate would benefit few.

"The reality is that only a small proportion of people - on the highest incomes - would benefit from cuts to the 41pc rate," it said. "There are many more progressive options, such as cutting the high level of VAT."

The think-tank said that a single person on €37,500 would pay no more than 13.8pc income tax – or 21.6pc if PRSI and USC are included.

"Even someone on €237,000 will pay 42.3pc of their gross income in tax, which is significantly less than the 52pc rate," it said.

Irish Independent

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