From top: Enda Kenny and Joan Burton at government buildings yesterday; Michael Taft.



Taoiseach Enda Kenny plans to move Ireland ” to US levels of income tax”.

So what does he think we have already?

Michael Taft writes

Ireland already has a US-style taxation system – if we use general government revenue as the benchmark.Before the crash Ireland was awash with revenue from the speculative boom; revenue that quickly evaporated. Since then, Irish government revenue has been steadily falling.

The graph (above) is what the EU Ameco [the annual macro-economic database of the European Commission’s Directorate General for Economic and Financial Affairs] database tells us:

By 2017:

The Government projects revenue will be below 32 percent of GDP. When we factor in multi-national accountancy practices, this figure rises to 34.5 percent

Ameco projects that US revenue will be 34 percent

Ameco also projects that Eurozone revenue will be over 46 percent.

A few things stand out in this. First, we are already at low US low-levels of taxation. Second, we are certainly not at European norms. We’d have to raise taxation by a mind-boggling €26 billion to reach the Eurozone average.

Even with the demographic benefit of having fewer elderly (which is substantially negated by a higher level of young people) we’d have to increase taxation massively.

Third, the Government projections foresee revenue falling even further out to 2021 when it will be below 34 percent.

And here’s the kicker: this doesn’t factor in tax cuts that a future government may introduce. For instance, Fine Gael wants to abolish USC. That will drive tax revenue down further, potentially falling behind US levels.

When measured as a percentage of GDP, Ireland is at the bottom of EU tables – fighting it out with Romania and Latvia for the rock bottom prize. Nods towards quality health and education services, childcare and eldercare, public transport, pensions and incomes supports are made, but these are little more than nods; perfunctory gestures in a debate that effectively excludes the social.

What the Taoiseach really wants is for Ireland to be a basement-without-a-bargain economy where public resources are squeezed, investment is starved, and the energy bulb frequently cuts out without any window to let in the light.

Michael Taft is Research Officer with Unite the Trade Union. His column will appear here every Tuesday. Follow Michael on Twitter: @notesonthefront