Wednesday, December 07, 2005

Vive la Republique

The primary focus of the constitution of the Irish Republic is the promotion and protection of the rights of the ordinary citizen. Yet our tax regime penalises the ordinary citizen in order to benefit the corporate entity. Today’s budget only serves to highlight, once again, the glaring anomaly that is the structure of the tax regime of this Republic.

Tax Rates
Joe Public, a PAYE taxpayer, is subject to much higher levels of tax than the corporate entity, even though many of the latter are not even Irish. Personal tax rates of 20% and 42% contrast sharply with a Corporation Tax rate of only 12.5%.

In most other European countries the Corporation Tax rate is higher, often much higher, than the Standard Personal Tax rate.

Tax Liability Calculation
A company pays Corporation Tax only on its operating profits, which are arrived at having deducted virtually all day-to-day operating expenses. Insurance, rent, transport, bank interest, lighting, heating, travel, wages, training, waste collection etc etc can all be deducted. A company can also deduct expenditure for office furniture, PCs, motor cars etc (by way of depreciation) before arriving at a tax liability. And then it’s only 12.5%.

Joe PAYE Public, on the other hand, pays tax on his gross income, less some modest allowances. He has to pay all his bills from after-tax income, with some relatively minor claims allowed for expenses such as medical, dental and bin charges. But try claiming for your ESB, your motor or home insurance, your car loan interest, your school fees, child-care costs, your Swedish au pair or your Xmas card costs and you will be laughed out of town.

Joe Public pays VAT on every product and service he buys, much of it at 21%. The company, on the other hand, can reclaim VAT on its purchases, offset against the VAT it charges its own customers.

Are we really Republicans? Are we, f**k!

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