Broadening the tax base: should lower-paid workers pay more?

• Published date: 31 October 2023
• Publication title: Irish Times (Dublin, Ireland)

The consultation closed last April and the Department of Finance has now published the submissions received — almost 30 of them — from a variety of tax experts, business associations and members of the general public

There was a wide variety of views expressed, with many looking for lower tax rates and an increase in tax reliefs.

But one overriding theme emerged: too few people are paying too much tax, and this needs to change. The solution? Increasing the tax burden on the lower paid.

Many of the submissions called for a broadening of the tax base to reduce pressure on middle-income and higher earners, who, they say, are bearing the burden of contributing income tax for the State’s coffers.

As noted by the Consultative Committee of Accountancy Bodies — Ireland (CCAB-I) in its annual taxation report, the Department of Finance confirmed that “the distribution of tax liabilities is markedly skewed towards higher wage earners”. The top quarter of earners (those earning €50,000 or more) contribute about 80 per cent of total income tax revenues, with another quarter of taxpayers “paying little or no income tax”.

Based on recent Revenue figures, some 1.26 million taxpayer “units” — individuals or jointly assessed couples — will pay neither income tax nor Universal Social Charge (USC) in 2024.

“Base-broadening reforms should be considered as a matter of priority,” it suggests, adding that Government should...