The estimated cost to the exchequer of the tax relief for private pension contributions is €1,990m. Plans are already underway to reduce the relief to 33% for all (those on the lower tax bracket only get 20% relief) which would make it more equitable.
Even a 10% cut in the exchequer cost of pension relief, targeted at the higher paid, would bring in an estimated €199m.
The state’s drug bill under the GMS scheme is €1,800m or around 13% of the €14bn health service bill. Generic drugs are considerably cheaper but less than 20% of the drugs dispensed under the scheme in Ireland are generic as against 70% to 80% elsewhere in Europe.
It is estimated that through this, €100m to €300m could be saved annually.
As of March 2010 there is €2,100m in outstanding tax due to the exchequer or around 5% of the total. Of that, €669m is under appeal, which means the Revenue cannot make any moves to collect it. This leaves Revenue with €1,443m of debt which is ‘available for collection’. A bit of a push could bring in half of that outstanding debt.
There are over 111,000 people earning in excess of €100,000 a year. A new higher 48% tax (as opposed to the current top rate of 41%) would yield an extra €410m. If one wants to secure the €3bn originally signalled by finance minister Brian Lenihan back in the good old days last June, when the economy was just on a tough path as opposed to dropping over a cliff as at present, the top rate would have to be increased to 84% for those earning over €100,000.
A 0.25% property tax on the 1.934 million houses would yield an income of €1,231m, while if the rate was set at 0.30% it would yield a windfall of €1,476m. This, according to the Commission on Taxation, would produce a property tax ranging from a low of €188 on a house valued at under €150,000 to €3,750 at the 0.30% rate on house valued in excess of €1.5m.
However, when waivers for low income households are factored in, the yield will drop to €926m at the lower rate and to €1,112m at the higher rate.
Local Government Efficiency Review Group estimated that €200m could be collected by tolling the national roads, although it is not transport minister Noel Dempsey's preferred option. This appears a conservative estimate given that the government paid National Toll Roads €650m to buy back the M50 tolls, which shows just how much money there is in tolls.
Like pushing an open door, this would be a popular move even though it would come from a government that introduced them in the first place – a move which fuelled the property crash. Most of the property relief schemes which spawned a host of 'flat pack' hotels and multi-storey car parks have been guillotined. But some are still operating and there would be legal problems in ending them before their term comes to an end.
The Commission on Taxation report of last year lists 24 tax-relief schemes that should be abolished, yielding €259m. These include artists' exemption (€66m) relief on rent, the rent-a-room relief, disposal of a site to a child, tax exemption on patent royalties, the seafarer's allowance and others.
The commission also suggested amendments to over 30 other relief schemes including capping at €500,000 the annual donation to charities which attract tax relief, ending mortgage interest relief for non-first-time buyers and treating child benefit as taxable income. These should yield a further €100m.
Though Taoiseach Brian Cowen has said that the cutbacks in the forthcoming budget would concentrate on spending rather than increasing taxes, some increase is likely.
While taxing work as a response to the recession is at odds with countries which have cut taxes in order to stimulate growth, as a small economy in dire straits, we do not have the same choice. Yields from a 1% increase across all rates:
Increase income levy rate from 2% to 3% €573m
Increase standard rate (20%) by 1% €420m
Increase higher rate (41%) by 1% €145m
Increase health levy by 1% €522m
Inevitably will cause near hysteria among the business fraternity, who will say that it will erode our competiveness with the UK in particular and spark another flood of cross-border shopping. Certainly, Ireland has one of the highest standard Vat rates of 21% (we also have a reduced rate of 13.5% and a zero rate) and are in sixth place behind Poland, Finland (22%) and Sweden, Denmark and Hungary (25%).
But we are not the highest and still behind Finland, birthplace of Olli Rehn, so…
A 1% increase on the reduced 13.5% rate €253m
A 1% increase on the standard 21.5% rate €334m
The sacred cow of the Irish economy, the low 12.5% corporation tax has been rigorously defended by the government against attack from the EU's Olli Rehn and President Obama. We are now regarded as a tax haven by many in the US as large companies channel products through their Ireland branch to avail of the low tax.
Last month, EU finance commissioner Olli Rehn announced that Ireland "will be a higher tax economy". So let's take the bull by the horns now; move it up.
In the period to October 2010 Corporation Tax yielded €2,621m, down €200m from last year. A 1% increase would yield €210m.
The doyen of political tweeting, the Green Party, has already suggested a 1c tax on each of the 1.4 billion texts sent by Irish people every year, which would yield around €14m.
To this can be added a tax on emails, tweets, text alerts etc. Raising up to €100m shouldn't be that difficult and the mobile phone companies could act as collectors.
Call it what you will – rates, poll tax, local charges – but an annual household charge for services, discarded with such munificence by Fianna Fáil in the 1970s, is now desperately needed. A charge of €750, including water charges and the existing waste charges of circa €300 a year, would yield €1.5bn or well over €1bn when waivers are included.
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