Sir, – The Government is examining the income tax rates and the universal social charge in advance of Budget 2015. However, to judge from the comments of Ireland’s all-too-cautious and unambitious Minister for Finance, the hinted changes (if any) appear too modest and uncourageous to make any difference to Ireland’s economy or to economic confidence. The effective marginal rate of income tax in Ireland (including 7 per cent for USC and 4 per cent for employee PRSI) is 52 per cent for individuals, and it is 55 per cent (thanks to an additional 3 per cent USC “levy“) if one has the audacity to be self-employed as a result of setting up his own business. These are rates of taxation that are unquestionably anti-enterprise and confiscatory. We should contrast these Irish rates with the 45 per cent top rate of income tax currently in place in Britain.
What needs to happen is that Ireland sees a budget, this October, which supports growth. Everything in the budget must support indigenous enterprise. To this end, the marginal rates of taxation must be reduced.
Cutting the top rates of tax (not merely changing the point at which people enter tax bands, but actually cutting the top rates) will encourage enterprise and employment because it will allow businesses to retain more of the money that they earn; this means that people can invest in their businesses by hiring more staff and purchasing new equipment, or create new businesses. It would also, crucially, help greatly to encourage talented people to remain in Ireland, instead of emigrating. Merely fiddling with the tax bands (which is a political cop-out, devoid of courage) would do little to change the true perception in Ireland, today, that we are living in a very high tax country, which is a cold house for indigenous enterprise. For the national finances to be balanced, Ireland needs a combination of public spending control and real economic growth. It is now time to work on growth by cutting the marginal rates of tax. – Yours, etc,
JOHN B REID,
Knapton Road,
Monkstown, Co Dublin.