Paradox of the Week..
“Ireland is a high tax country”
We have a marginal rate of tax (including Universal Social Charge and PRSI) of 52% which kicks in at €32,800, just above our average wage of €32,400.
“Ireland is a low tax country”
But compared with other countries, we pay less average income tax (including Universal Social Charge and PRSI) until we start earning more than 150% the average wage.
From the IMF report published earlier this week.
Horror Statistic of the Week
We know that the marginal rate of tax facing anyone earning over €32,800 in Ireland is a staggering 52% (comprising Universal Social Charge of 7%, PRSI of 4% and income tax of 41%), so if you’re earning €40,000 a year and someone offers you €100 for a couple of hours overtime, you’ll just take home €48 after deducting taxes of €52 from the €100. However if you earn €18,303 and your boss offers you an extra €1 for some reason, DON’T TAKE IT because you’ll pay €468.27 of taxes and charges on that €1. Yes, as revealed the IMF report published this week which contains a table of our income tax, the marginal tax rate between €18,303 and €18,304 is 46,827%.
Health Scare of the Week
An IMF report this week showed that in Ireland, we spend more of a proportion of GDP on the public health system than any other country in the world except the USA.
But in terms of the quality of our healthcare, we are waaaaay down the list.
Plus we found out from the IMF report that “generic drugs account for only one-fifth of all prescriptions, which compares poorly to four-fifth in neighboring United Kingdom.”
The IMF document suggests there is plenty of scope to save on the health pay-bill and on the cost of drugs.
Quinn saga instalment of the Week
The planned rally for tomorrow in Ballyconnell has been cancelled apparently, due to a bereavement. But the organisers, “Concerned Irish Citizens” had big plans for the rally which was set to be a repeat of the demonstration in July 2012 when about 4,000 people turned out in support of Sean Quinn . Here is a sample of the slogan ideas for protestors’ placards:
Government appeal of the Week
With the Labour-Fine Gael coalition set to be tested to breaking point in the three-month run-up to Budget 2013, both the Labour and Fine Gael parties held separate “think-ins” during the past week, and both have had an eye on the potential for internecine dissent, something which has even discomfitted the IMF recently. For Labour’s part, party leader Eamon Gilmore has come out and appealed for an early end to kite-flying season, graphically illustrated by Japlandic.com on here recently.
(Graphics above produced by Japlandic.com, contact here)
Iris Robinson award for rank hypocrisy
The quarterly tax defaulters lists produced by Ireland’s Revenue Commissioners have lost something of their power ever since Deputy Mick Wallace’s company agreed a €2.1m settlement over deliberately under-declared VAT, a settlement which is unlikely to be paid, whilst Mick continues to sit as one of 166 law-makers in the Dail. Questions in that case still remain over the under-declarations and the subsequent settlement reached with the Revenue Commissioners, and Mick says that no-one except his constituents in Wexford has the right to remove him, though they are not scheduled to vote again until 2016. But for all that, in a small country where seven-degrees-of-separation is actually closer to three degrees, there is keen interest in the quarterly list of tax sinners. The glamorous star of yesterday’s list might have been the 31-year old model, Glenda Gilson but her bill only came to a relatively modest €73,000. It was the former school principal and current “operator of a private school” Padraig O’Shea (pictured here) whose €705,000 settlement grabbed the headlines. Padraig is the former principal of St Joseph’s College in Borrisoleigh in Tipperary, a “family run co-educational secondary school” where Padraig is still listed as “manager”. Padraig and the school hit the national headlines earlier this year when it emerged the school had refused admittance to a pregnant teenager in 2009, with Padraig assuming the high moral ground saying his school “did not take such girls”. He later went on to give interviews where he defended his decision on the grounds of morality and moral standards. Like some American evangelist who has finally been found out, Padraig is today revealed as a sanctimonious hypocrite who metaphorically fornicated his fellow country men, women and children with a vast under-declaration of income tax. As Mick Wallace said “let he who has not sinned cast the first stone”, but then again we know from events in 2009 that such views are not compatible with Padraig’s outlook on life.
Table of the Week
The Irish Fiscal Advisory Council issued a report during the week in which it called for an extra €2.3bn of additional cuts and taxes in 2013-2015. The report provoked outrage from some quarters, but let’s not forget that the present plan is to cut and tax €18.7bn in 2013-2015 which dwarves the Council’s recommendation of an additional €2.3bn adjustment.
NAMA Wine Lake 
@ NWL There are many reasons for our higher levels of health expenditure (or should it be ill-health?) than average, one is clearly the existence of parallel public and private systems.
However we also have an almost unique demographic make up. For example our birth rate at over 16 per thousand is by far and away the highest in the OECD, for example it was 60% higher than that of Denmark in 2011 and approx. 75% higher than that of Italy and Portugal.
On the other side, we have a very low number of older people, because of the massive emigration of the 1950s. However we house a much higher proportion of our older people in institutions than most other countries. Up to date statistics will be published shortly as part of the Census reports. Fair Deal has only made this worse, enabling many to evade their responsibilities to their elderly relativies at marginal cost.
Unfortunately, health expenditure has never had anything to do with health outcomes. Denmark, number three on the list, has worse health outcomes than Ireland and dramatically worse outcomes than Sweden, to which it is connected by bridge.
Consumption of alcohol & tobacco, the degree of equality within society all play far more of a role, than spending once basic expenditure requirements are met. Spending a €100M on public sports facilities may provide far better outcomes than spending a similar amount on (ill) health.
The other point is that the difference between say 10th and 20th in many of these tables are marginal.
@Niall, You wrote: “There are many reasons for our higher levels of health expenditure (or should it be ill-health?) than average, one is clearly the existence of parallel public and private systems.”
Perhaps you could expand on that? I do not see the logic behind the statement. Approximately 54% of the population has private health insurance and avails of private hospital treatment even thought they also contribute to the public health service through the tax and PRSI system.
Therefore, logic suggests that our levels of public health expenditure should be less than average – not more, as 54% of our population have chosen to opt out of using it in favour of the private system.
In other words only 46% of the population are using our heathcare system in any meaningful way, even though 100% of taxpayers pay for it.
Socialism mustn’t be working, or why would the majority of the Irish people choose to trust their health by paying on the double for the private system?
@NWL
In todays climate looking at marginal tax rates and bands for Ireland compared with the rest of the OECD countries is almost a complete waste of time because the indebtedness of the Irish household is in fact the real tax that kills any chance of saving for the future, investing in a business etc until the debt issue is tackled the marginal tax taxes will remain exactly that – marginal issues.
Until the powers that be recognise the structural long term effects of unstainable household debt we run to stand still. The elephant just gets bigger and the PIB is not the answer.
I know this is obvious, but IMHO worth stating nevertheless: replacing the GDP denominator when measuring Ireland’s public health expenditure by GNP increases the ratio in NWL’s fourth table above to 10.7% instead of 8.5%. This puts Ireland off the scale in spite of having a relatively young population. Likewise, rebasing educational expenditure to GNP, jacks up Irish expenditure by 25% and puts us at top of the class in terms of expenditure (but not in terms of quality or achievement).
Every time I see international comparisons based on GDP, I instinctively, increase the value by 20-25% to take account for the uniquely Irish divergence between GDP and GNP. I think all official reports should do likewise and at least show the GNP ratio in a footnote or parenthesis. OK, OK, I know that this approach excludes the corporation tax payable on multinational profits but this is relatively low in percentage terms and does not detract from the argument that in measuring many aspects of national performance, GNP is a better base than GDP especially as the GDP-GNP gap is widening and multinational profits are very dependent on external factors e.g. patents expiring, US tax rules etc.
Low urban density in Ireland also accounts for high health expenditure. That is, too many small and inefficient hospitals, elderly care units, health centres, houses in the middle of nowhere for intellectual disabilities clients, etc. Think of all that infrastructure to be purchased, equipped, maintained, staffed, and the generous mileage and subsistence expenses for staff travelling to an fro.
Our health service is inefficient and overpriced compared to others. We pay salaries that are too high, allow restrictive practices, have an absentee rate that should make any employee blush and we pay too much for pharmaceutical products. Yellow pack product purchases are essential in reducing costs.
We have an aging population so the issue is not going away. People over 65 account for almost 50% of all bed usage although they represent just 11% of the population. Ireland is aging at a significant rate – an additional 20,000 people over the age of 65 is added to the population each year. Those aged 65 and over will account for 20% of our population by 2040. With a growing population and increasing life expectancy, even the politicians should see where this is heading in terms of increasing expenditure on healthcare.
Total public healthcare hospital spend peaked at €5.5 billion in 2009. Since then the annual hospital budget has fallen to €5 billion in 2012. Rather than pursuing purchasing efficiencies and addressing staff working practice abuses and salaries, it is acute hospital care that is bearing the brunt of the cut backs so far – and this is going to mean longer waiting lists and further public criticism. And the public are right to crticise.
I could write a book on this and why the healthcare system is in such a mess, but it would be a waste of time. In essence, its ethos is rooted in the same old buddy system that pervades the rest of the civil service and privileged class in Ireland. It needs to be shut down and rebuilt from the ground up on totally different principles. Never happen though. Too many vested and very cosy, comfortable interests.