Taxation Overview in Ireland

  • Convenience: Tax collection should be user-friendly. Examples of local property tax payment methods include:

    • Phone
    • Online
    • Post
    • Direct deduction from wages/social welfare
    • Payments at banks/post offices

  • Certainty: Taxpayers need to understand their liabilities.

    • Budget day occurs in October; most changes take effect on January 1 of the following year.
    • This provides stability for both taxpayers and government planning regarding revenue.

  • Main Source of Government Revenue:

    • Taxation is primary for government funds in Ireland.
    • Some taxes (e.g., sugar tax, carbon tax) address market failures.

  • Value Added Tax (VAT):

    • An indirect tax paid by final consumers on goods/services.
    • Standard rate reduced from 23% to 21% from September 2020 to assist businesses post-Covid.
    • Lowered rate of 9% for tourism/hospitality (down from 13.5%) to boost demand.
    • Includes a range of goods/services like motor vehicles and electrical goods.

  • Regressive Tax:

    • Takes a higher percentage of income from low-income earners compared to high-income earners.
    • Examples:
    • Low-income earner (€300/week): Pays €100 VAT (33.3% of income)
    • High-income earner (€600/week): Pays €100 VAT (16.6% of income)

  • Important Note: Further details on taxes found in Chapter 7.