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Here's how much your tax goes up as your wages increase

Workers here often pay more in tax than those in other European countries.

Image: Shutterstock/Smit

THE IRISH TAX Institute has analysed how much tax people in Ireland pay as their wages increase.

In a statement released today, the organisation said Ireland is “at the high end of the global tax tables compared to competitors”.

It noted how the amount of tax paid “rises very progressively” as a person moves through salary levels, especially once a person earns €75,000 or more.

Here’s the breakdown:

  • A worker on €25,000 earns almost 1.4 times the salary of a person on €18,000, but pays 5.6 times the tax
  • A worker on €35,000 earns 1.9 times, but pays 10.9 times the tax
  • A worker on €75,000 earns 4.2 times, but pays 44.1 times the tax
  • A worker on €100,000 earns 5.6 times, but pays 65.8 times the tax
  • A worker on €120,000 earns 6.7 times, but pays 83.1 times the tax

At a salary level of €75,000, taxpayers in Ireland are paying rates close to France and over €4,500 more tax than their equivalents in the UK. Ireland’s progressivity is second only to Israel in the OECD.

As salary levels increase to €100,000, Irish taxpayers are paying rates near those in Sweden. At €100,000, Ireland ranks ahead of taxpayers in France, Spain and the UK, among others.

Irish Tax Institute president Mark Barrett said “a coherent and planned approach to Ireland’s personal tax system is needed in the medium to long-term in order to balance both the economic and social needs of the country into the future”.

50 different tax changes

Barrett was speaking ahead of the launch of the institute’s report Perspectives on Ireland’s Personal Tax System – A Medium to Long-Term Approach.

It highlights that over 50 different tax changes have impacted Ireland’s personal tax system in the past seven years and has led to 53 moving parts in personal taxes. Ireland has three different tax charges each with a different entry point and a total of 10 rates, 15 bands and 22 main personal tax credits.

Barrett said the institute produced its report as part of a broader discussion taking place on the personal tax system, and he welcomed the Income Tax Reform Plan published this summer, as outlined in the Programme for Government.

There was a universal appreciation that ‘needs must’ and that in the early years of the crash a blunt approach to increasing tax yields was essential.

“However, the combined impact of those changes and the way they have been to some extent unwound has left some interesting traits on the Irish personal tax system. Traits that we should reflect on as we look towards the formulation of future personal tax policy,” he added.

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Órla Ryan

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