Tax rates ‘too low to stamp out poverty’

TAXATION rates are too low for the Government to make a credible effort at stamping out poverty and disadvantage, according to religious think-tank CORI.

But the group warned against slapping tax hikes on the average worker, calling instead for increases to be targeted at the wealthy and for recent tax cuts on business profits to be reversed.

In its annual socio-economic review, the Justice Committee of CORI (Conference of Religious of Ireland), found Ireland’s tax take was the lowest in Europe and the country’s spending on public services, such as housing, healthcare and transport, was also below the European average.

Committee director Fr Sean Healy said it was impossible to boost the latter without biting the bullet on the former. “Currently Ireland is a too-low tax economy,” he said.

“It is an obvious reality that Ireland can never hope to address its deficits in infrastructure and social provision if we continue to collect substantially less tax income than that required by other European countries.”

Comparisons with 14 other European countries, made by measuring total tax revenues as a percentage of national wealth, put Ireland’s tax-take at 28% compared to 34% for the second lowest country, Portugal, and 50.6% for the top country, Sweden.

Of the 30 countries that make up the Organisation for Economic Co-operation and Development, only Mexico and Japan rank lower than Ireland.

“If we expect our economic and social infrastructure to catch up to that in the rest of Europe, how can we do this while simultaneously gathering less taxation income than it takes to run the infrastructure already in place in those European countries?” Fr Healy said.

He challenged the Government to explain how its low-tax policy was compatible with its election time promises of providing cash to help the worst-off in society.

CORI said there was little evidence to suggest that “small” tax increases would have any significant impact on the economy but pointed out they would yield valuable extra resources to spend on public services.

It calculated that an increase of just 1% in the ratio of tax revenues to national wealth (from 28% to 29%) would yield an extra €1.3 billion for the Exchequer in a year.