Euostats on Irelands low tax regime and social protection: the reality

With the Report on the Commission for Taxation being published today it is worth keeping in mind how low Irish expenditure on taxation actually is in comparative terms. This graph from Eurostat shows that taxes on production and imports is only 11.1 per cent – 12.3 per cent of of GDP. This is remarkably low, and even lower if GNP is used. This graph shows taxes on income and wealth as a percentage of GDP. Again, much lower that our European neighbours. The report being delivered today is premised upon the assumption that low taxation is a good thing. But, a low tax regime has effects.

This graph shows that despite popular opinion, Ireland is a very low spender compared to the EU 25 on social protection. This graph shows that Ireland is in the higher range of income inequality. It is also well known that expenditure on health and education is low compared to the EU and average compared to the OECD. Thus, the public finance crisis is going to managed in Ireland by cutting expenditure in areas that are already under funded in comparative terms (this of course excludes wages, which, are higher in Ireland compared to our European neighbours. We also spend more of our health and education budget on wages in these sectors that most EU countries).

Logically and rationally one would therefore conclude that to bridge the debt-GNP ratio we should be raising taxation? But, this is absent in Irish public discourse, despite the fact that a progressive taxation system is the most efficient and equitable way to distribute resources.

One response to “Euostats on Irelands low tax regime and social protection: the reality

  1. Thats why it’s called a political economy :)

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