Wednesday, November 28, 2012

Collecting more Income Tax?

The pre-budget submission of the Irish Tax Institute contains the following:

The income tax yield in 2011 exceeded that for 2007, despite the dramatically reduced number of people in employment. The revenue from income tax (including USC) in 2012 is projected to be the highest ever (€15.3 billion) despite the ongoing high unemployment levels.

Here is a table of annual tax yields from the Databank of the Department of Finance.  Click to enlarge.

Annual Tax Revenues

It can be seen that the Income Tax in 2011 of €13.8 billion is indeed more than the €13.6 billion collected in 2007.  However there is an element of comparing apples and oranges in the figures used the Irish Tax Institute, who you’d think would know their onions on this.

Here is a table that sets out the various deductions on income made since 2007.

Income Deductions 2007-2011

In 2011, the Universal Social Charge (USC) replaced the Income and Health Levies and all income from the USC is counted as Income Tax.  The Health Levy, as an appropriation-in-aid, was paid directly to the Department of Health and is counted as a social contribution.

A like-for-like comparison between 2007 and 2011 would be to sum the following receipts, such that they are, in each year

Income Tax + DIRT + Income Levy + Health Levy + Universal Social Charge

For 2007 this would give a total of €14.9 billion and for 2011 a total of €14.1 billion.  Although there have been significant tax increases in recent years the €15.3 billion that is projected to be collected in 2012 is not significantly higher than the €14.9 billion collected in 2007 but there is a dramatically reduced number of people in employment.

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