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Clarification about additional tax (Quarterly Economic Observer)

Posted on September 28, 2012 by Tom Healy

This note clarifies about the impact of our tax proposals on the possible additional tax payable by households (or jointly assessed tax cases by the Revenue Commissioners) below €100,000 per annum. Our proposal is that the top 20% of income tax payers should pay higher tax in 2013 – however this might be done through alteration in tax credits or changes to tax relief. Absence of data prevents us from modelling the precise methods for achieving an additional tax yield in respect of the top 20%. Government has a number of options including, for example, a graduated approach involving little or no additional tax for households in the top 10-20% income bracket with a higher liability for the top 10%. Our proposal remains for an additional €650 million on average from the top 20% of income tax payers in 2013 by means of an estimated average 1.5% increase in effective rates. The issue is discussed at greater length in the Quarterly Economic Observer on pages 23-26 and in the Quarterly Economic Facts on pages 69-70 where a distribution of income tax cases is shown confirming that 20% of tax cases had an estimated gross income in excess of €55,000 per annum in 2009.As I stated on Morning Ireland on 26th September it is my view that additional revenue measures should be aimed primarily at households with income in excess of €100,000 per annum. In that interview I cited data from the Revenue Commissioners and as noted in our publication the figures (unfortunately) omit USC and PRSI payments and refer to income tax only.

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