With unemployment soaring, why is the income tax take still high?

Smart Money: Payments by higher earners support exchequer for now – but tax bills could rise

Those in lower-paid areas of employment are suffering most from job losses and poorer prospects, while many better paid employees continue, supported in many cases by their ability to work from home. Photograph: iStock

Those in lower-paid areas of employment are suffering most from job losses and poorer prospects, while many better paid employees continue, supported in many cases by their ability to work from home. Photograph: iStock

In the midst of a pandemic economic crisis, with unemployment shooting higher, how come the amount of income tax being collected is way ahead of expectations and running just slightly below 2019 levels?

It has a lot to do with the extraordinary nature of the recession – and also with the unusual structure of the Irish income tax system. Together with soaring corporation tax, this may give Ireland some leeway.But the longer term costs of the crisis also point to higher taxes in future, even if Minister for Finance Paschal Donohoe said there would be no income tax hike in the next budget.

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