James Fitzsimons: Tax hikes inevitable as public spending spins out of control
While the Government fails to keep a tight rein on expenditure, drastic measures will ensue, writes James Fitzsimons
The standard rate of income tax may still be 20 per cent, but it is moving to 30 per cent and maybe even 35 per cent as it was many years ago. Capital gains tax, gift tax and inheritance tax moved to 30 per cent in the Budget.
Even the domicile tax moved to 30 per cent for well-heeled Irish people who moved their tax base abroad. In spite of what the Government says, the rate of tax on income is increasing and will continue to do so. While the Government refuses to bring expenditure under control, we can only borrow or tax our way forward. National debt spiralled out of control in the last three years to pay back foreign banks that refuse to accept their losses.
The real standard rate of tax is already at 27 per cent and the top rate of tax at 48 per cent when the universal social charge (USC) is added. The income tax system is inefficient. It always has been, in spite of the fact that net receipts reached €47.5bn in 2007. In 2010, net receipts were less than €32bn and they are about €34bn for 2011. We are €13.5bn down in revenue from its peak in 2007.