The Irish Tax Institute has said that a one income family on the average industrial wage has taken a financial hit of €423 a month since the first of four austerity budgets began just over three years ago and is the equivalent of a 16% reduction in monthly take-home pay.
Families where there are two average income earners have seen their monthly income reduced by €613 a month while a one income family on a salary of €55,000 has seen a reduction of €564 a month in their overall income.
The reductions are a result of steep increases in income tax, other taxes and reduced benefits and do not factor in reduced tax relief on medical bills and increased health insurance costs as a result of the insurance levy. “In just over three years we have seen dramatic increases in income tax and five new taxes including the Income Levy which morphed into the Universal Social Charge, the Pension Levy, the Non-Principal Private Residence Charge and Carbon Tax”, said Bernard Doherty.
Speaking at a tax briefing today Irish Tax Institute President Bernard Doherty said: “The capacity for people to bear more pain is running out as we approach an overall tipping point in terms of the money that can be taken from them in tax. We welcome the Minister’s commitment not to touch income taxes which would damage employment and the economy; however there is no doubt that €1.6 billion in tax adjustments next year would still be felt by Irish taxpayers at an individual level”.
“The tax element of the last four austerity budgets was almost €4.8 billion and the Government is now seeking to raise €4.65 billion in taxes over the next four budgets starting in December.”
The Irish Tax Institute President said that with increasing unemployment and an ageing population the Government must continue to depend on the same and in fact a decreasing number of taxpayers to fund the exchequer. It is not sustainable to impose more tax increases on this same group of people or we will push them over the tipping point.
He said: “The only real solution for increasing taxes is to broaden the tax base through job creation. We need an ambitious tax strategy that supports Irish indigenous business, drives sales and exports and creates the major employers of the future”.
The challenge of a shrinking tax base is very obvious when we see that the income tax take in 2011 is set to exceed 2008 levels. In fact the income tax take in 2011 looks set to be the highest ever, even surpassing the peak levels of income tax revenue in 2007 at the height of the economic boom in Ireland. This has added significance when we consider that unemployment levels in Ireland have increased by almost 10% since then and the number of people in unemployment has almost tripled.
“As we approach the budgetary process this autumn it is vital that we evaluate existing tax policies and develop an ambitious tax strategy that supports Irish indigenous businesses, job creation and drives the Irish economy towards recovery. We are at a critical juncture and all options must be placed on the policy table.”