Finance Bill tinkers with tax inequity

One in three PAYE workers pay top tax rate, one in four top earners pay no tax

BY ROBBIE SMYTH


There were few surprises in the publication of last week's Finance Bill, and once again, despite hints of reform of the massive tax avoidance measures in 26-County finance legislation, there was little new on offer from the coalition.

Responding to the release of the Finance Bill, Sinn Féin spokesperson on the economy Caoimhghín Ó Caoláin TD highlighted this missed opportunity and said it provided for "another year of inequity in how the tax code is applied".

"The changes announced today involve only minor tinkering with the system. There is an urgent need for the wholesale reform of the tax code in the 26 Counties," Ó Caoláin said.

It was, according to the TD, "business as usual" at the Department of Finance. "We will have another year of inequity in how the tax code is applied and ineffiencies in how taxes are collected."

It seems that the Department of Finance is the last to recognise that there is an urgent need for not just wholesale reform of the tax code in the 26 Counties but the widest possible debate on how to create a just and efficient tax system.

Ó Caoláin highlighted some of the core deficiencies in the tax code. He said, "The NESC report 110 released last November highlighted over €9.8 billion in lost tax revenue through the vast array of reliefs and avoidance schemes set up by successive governments, often to aid the already rich and wealthy in society. The measures announced today involve only a minor tinkering with this system. Where is the much-needed review?

"Also absent is any recognition of the concern highlighted in last September's Comptroller and Auditor General report, which found that substantial amounts of tax were inappropriately written off by the Revenue Commissioners.

"Last December, a study by the Revenue Commissioners found that a quarter of the state's highest earners pay no tax at all. Yet just last week we found in the documentation released under the Freedom of Information Act from the government Tax Strategy Group that one in three tax payers will be paying income tax at the top rate by the end of the year, even though Charlie McCreevy's own target is that only one in five workers will be paying the top rate.

"The tax regime is in crisis and it is the ordinary workers who are being penalised, while as usual the wealthy in society walk away not paying their fair share. Minister McCreevy has failed badly."