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Tax on workers is 'already high'

AS ordinary taxpayers brace themselves for stiff increases in personal taxes in the forthcoming mini-budget, the Sunday Independent has learned that the Commission on Taxation believes taxation on labour is already quite high.

A source said: "Headline rates of personal taxation are low, but the variety of levies on health, training and the new emergency levy means Irish personal taxation levels are quite high.''

Last week, the political system was thrown into disarray with the revelation of a collapse in tax revenues for the first two months of this year. However, the Sunday Independent has also learned that whilst the controversial income levy was expected to raise €100m a month, the actual take is less than €60m.

This trend indicates that if the Government decides to raise personal tax rates it may have to impose far higher percentage increases to secure the amount of money it needs.

It is also believed that the Commission on Taxation -- which is chaired by former Revenue boss Frank Daly -- is close to the point where it could have firm proposals "ready to go'' within weeks.

When it comes to revenue- raising proposals, the Commission is far more interested in reducing the number of tax breaks that are available to wealthy individuals as distinct to increases in tax on labour.

But its report may also call for a reduction in tax relief for ordinary private sector pension-holders and a "fierce argument'' is raging within the commission over the €2.9bn cost of this relief versus the incentives that it gives to provide for the future.

It is also believed that as part of its brief to reform the current funding of local government, the commission will also bring in recommendations for a property tax and water charges.

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