Several economists have asserted the need for lower-income individuals to contribute to the income tax, in an effort to broaden Ireland’s tax base. Currently, a mere fifth of all taxpayers are responsible for paying 80% of all taxes. Dr. Emma Howard of the Technological University Dublin and chair of the Irish Society for Women in Economics voice concerns about the narrowness of the Irish tax base. She believes that to defend the most vulnerable in society, a wider tax base and improved targeting of social welfare measures are required. These views were voiced at the inaugural day of the Patrick MacGill summer school in Glenties, Co Donegal.
Seamus Coffey, an Economics lecturer and Irish Fiscal Advisory Council’s former chair from 2016 to 2020, noted that past governments have chosen to exempt more people from the tax net. This strategy led to minimal or no taxes on low income, enhancing income equivalency in the state. Nevertheless, altering this policy could trigger intense opposition, and the country’s dependence on growing corporation figures leaves the economy unstable.
Contrary to some economists, Coffey believes that these receipts could even increase in coming years rather than decrease, as is commonly feared. He pointed out the destabilisation experienced post-2008, stating that a wider base would provide greater stability. But the government would face significant resistance if they attempted to implement changes, given that the state has followed a policy exempting people from the tax net for the last few decades.
According to Mr Coffey, the Commission on Taxation and Welfare has amassed a voluminous 500-page report detailing potential adjustments to taxation for a wider distribution. However, it poses significant difficulties for any Finance Minister brave enough to tackle the issue.
In 2008, family debts totalled €200 billion, primarily in the form of mortgages, complemented by €100 billion in deposits. Presently, this debt has lessened to €120 billion, marking substantial repayments, says he. Despite low-interest returns, deposits have skyrocketed to €180 billion, with banks currently making a 4 per cent profit depositing these funds with the Central Bank.
Dr Enda Hargaden of the University College Dublin school of economics, who concedes economics to be a “gloomy discipline,” recommends the State to equip itself for considerable crises in the looming years. He advises readiness for the eventuality of another pandemic, no matter its nature, and the need for ongoing investment. He also underscores the necessity to prepare for potential warfare on the country’s soil, regardless of the adversary, and to invest in this eventuality as well.
Concurrently, Eamon Ryan, the Environment Minister, alerted that the forthcoming international climate negotiations run the risk of being stalled by escalating political instability, particularly in light of current happenings in United States politics.