October 11th was Budget day in Ireland and with it new rules to learn and explore as usual. It’s interesting to note that the fast pace of our modern world (and economy) is reflected on this. I wonder if there ever was a day when we just took for granted that we would pay the same amount of tax, social security and get the same protections. I guess in the really old days the answers would be a lot, none and none, respectively.
I like to be a bit more meticulous and so let’s see what is new for people living in Ireland in 2017. The two biggest changes are the Universal Social Charge (USC) being lowered by half a percentage point on the lower three bands and a 5% tax rebate on first time buyers of new homes.
I plan to talk more in the future about the tax system in Ireland but for now I’ll highlight only these two points.
A bigger overview can be found here.
Most of the measures introduces left most of us very skeptic, especially in matters concerning the housing market crisis that is ongoing. Allegedly, prices on new homes have already risen since the Finance Minister officially announced the measures.
Overall, the tendency of the last two years to lower taxes is continuing, despite a slowing down this year. The 2015 and 2016 budgets were arguably more generous from this point of view. Ireland is still a very progressive system and these numbers, before the Budget for 2016, show that the lowest income people pay very little to no tax, while the tax burden falls on high income earners.
Another interesting point is that according to that article, Irish high income earners (characterized as earning 75.000 euros per year) already pay more effective tax than their Swedish counterparts. I’m not too sure about this, and I would direct anybody interested in this matter to dive on their own (one of these days I’ll whip up my own research about this). What matters though is that (as fame and my own experience would have it) the Irish taxpayer doesn’t get nearly as much bang for their buck as the Swedish one. We can dig into this in another post, but scratching the surface on things such as maternity and paternity leave, childcare and healthcare leaves us in Ireland way behind the Swedes.
Finally, I’ve added an Excel spreadsheet to calculate taxes in Ireland which offer more flexibility than traditional solutions found online, such as adding bonuses, voluntary contributions to pension schemes and passive income from dividends and capital gains. You can find it here.
Also published on Medium.