Tasc says tax cuts for high earners will harm public services

Think tank Tasc has said the vast majority of people would benefit more from maintaining and boosting public services than from cutting the higher rate of income tax in Budget 2015.

Tasc research director Nat O’Connor said inequitable tax cuts for high earners would undermine health, social housing and other vital public services.

“The weight of evidence suggests that cutting the 41 per cent higher income tax rate will only benefit higher earners, without any boost to the economy or job creation as a result,” he said. “On the contrary, IMF staff papers, among other sources, demonstrate that public investment has a greater impact on economic growth than cuts to income taxation,” he added.

Earlier this week employers’ group Ibec said more than half of Irish taxpayers would benefit from a cut in the marginal rate of income tax. In a riposte to what it says is misinformation in the budget debate, Ibec says Ireland is not a low income tax country. According to Ibec, the Irish income tax regime is “one of the most punitive” in the EU. Tasc disputed Ibec’s view that Ireland is a high tax country for labour incomes, saying Ireland had the fifth lowest implicit tax on labour, which is Eurostat’s standard measure of taxes on labour incomes.

Tasc said Ireland’s tax and social charges were just three-quarters of the EU average level.