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Tipping Point

More tax austerity will break Irish families, tax institute warns

The Irish Tax Institute says some employees have already lost a sixth of their take-home pay – and are now at ‘tipping point’.

THE IRISH ECONOMY is approaching a ‘tipping point’ beyond which any further increases in taxes would do more harm than good, the Irish Tax Institute has warned.

The institute says the average single-income family has already seen its take-home pay fall by €423 per month over the last four budgets – the equivalent of 16 per cent of their entire net earnings.

Families with two earners on the average income have lost €613 per month, the institute says, while earners on salaries of €55,000 have lost over €6,750 in take-home earnings since the first of four austerity budgets in October 2008.

Those drops do not include the reduced tax reliefs, and other costs that have increased, such as health insurance – and now the ITI says there is a “tipping point” at which no more money can be raised by tax hikes.

Speaking at a tax briefing, ITI president Bernard Doherty welcomed the commitment not to increase income tax in this year’s Budget – though expressing worry that the government’s plan to raise overall tax income by €1.6bn next year would “still be felt by Irish taxpayers at an individual level”.

Documents circulated to German MPs last week – and which have subsequently been published by the Department of Finance – showed that the government was planning a wholesale reform of income tax for 2013, which will likely see more people fall into the tax net.

ITI said it was “not sustainable to impose more tax increases on this same group of people or we will push them over the tipping point”.

“The only real solution for increasing taxes is to broaden the tax base through job creation. We need an ambitious tax strategy that supports Irish indigenous business, drives sales and exports and creates the major employers of the future,” Doherty said.

In full:‘s coverage of Budget 2012 >

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