Middle-income families to feel most pain in hard hitting report At the launch of the Commission on Taxation report yesterday were commission members (left to right) Jim Kelly, Frank Daly and John Conlon. Julien Behal/PA
THE report of the Commission on Taxation is a beast of a document. It runs to more than 500 pages and weighs enough to pull the arm off you if you carry it around for long enough.
Big and brutal in appearance, it also has the potential to deliver a flurry of crushing blows to consumers.
Recommended is a list of tax rises that, if implemented, would punish those at work. Property taxes, water charges and a carbon levy are among the worst hammer blows proposed.
These and the other proposed measures in the report have the potential to inflict an additional €4,000 in new taxes on the average household. This is at a time when families are already reeling from a succession of hits to household incomes.
The two savage Budgets in the past 12 months have cost the average middle-income family €5,000 a year.
The introduction, and then doubling, of the income levy means that even those on the average industrial wage are now paying a marginal rate of tax of 51pc.
This is because they are paying income tax at 41pc, PRSI of 4pc, the health levy of 4pc and 2pc on the income levy.
This means that more than half of every euro earned is taken by the Government.
Yesterday's report from the tax group admits that the income tax burden is now severe on even those on relatively modest incomes.
It points out that a single person on just €36,400 currently pays 54pc of their income in tax when levies and PRSI are added to the 41pc tax rate.
It would seem strange to add to this by advocating a long list of new taxes, which the commission says will broaden the tax base and make it fairer and more sustainable.
Granted, those new taxes would be offset by lowering taxes on labour, to produce what the report calls a "revenue neutral" situation.
The report discusses some taxes on employees that could be reduced, but significantly it does not make any firm recommendations on exactly what taxes should come down.
It muses that the €1bn it says could be raised from the likes of a property tax could be balanced by cutting the lower 20pc rate of tax to 18pc. Alternatively, the 41pc rate could come down to 36pc. Or the hated income levy could be halved.
But the report "bottles it" by not making these suggestions firm recommendations. The chairman of the commission, former head of the Revenue Commissioners Frank Daly, said at a briefing yesterday: "Some of the measures we recommend are radical and involve taxing ourselves in ways that we have avoided for decades."
However, it is difficult to agree with him. Further proof of this comes from the wishy washy recommendation on a third tax rate. The report says a third tax rate has merit, but doesn't say if this should be a middle rate, between the two existing rates, or a higher rate, of say, 48pc.
When it comes to child benefit the report also pulls its punches. Tax it, the commission says, but adds that there should be a means testing of the payment. This has all the hallmarks of the report rubbishing its own recommendations.
What this means is that it is now likely the Government will take the recommended tax hikes and impose them on hard-pressed consumers.
As there are no specific recommendations on cutting taxes, other than a general call to compensate for new taxes by lowering labour taxes, Minister for Finance Brian Lenihan and his mandarins are likely to hit the middle-income earner again.
If it were a boxing bout, the referee would stop it as the taxpayer in the red corner has taken enough punishment. But it is not, and so Marquis of Queensbery rules do not apply.
