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Tuesday, September 25, 2007 :
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Revealed: How some top earners pay 5% tax
FORTY-EIGHT of the country’s richest people paid less than 5% tax in 2003, a year in which each is believed to have earned an average of €2 million.
Three of the 48 paid no tax at all.
The average industrial worker earned less than €30,000 in 2003, yet handed over a far greater percentage of their income to the taxman, being levied at the standard 20% rate.
The Government was last night accused of allowing the country’s top earners to avoid tax, after details of the effective tax rates of the country’s top 400 earners in 2003 were released in a study by the Revenue Commissioners.
Labour finance spokeswoman Joan Burton said the figures were “a shocking indictment of the Fianna Fáil record on taxation over the past 10 years”.
Fine Gael finance spokesman Richard Bruton said the Government had failed to ensure the wealthiest paid their fair share.
The figures showed that 104 of the 400 millionaires paid less than 20% tax that year. Two thirds of those paid tax of 10% or less — three paid no tax at all, 45 paid 0% to 5%, and another 17 paid between 5% and 10%.
Another 216 of the 400 paid between 20% and 40% tax, when in theory their incomes would have justified at least 42%, the higher tax band at the time.
The remaining 80 paid between 40% and 45% tax, according to the figures.
The Revenue study for 2002 showed the top 400 earners enjoyed an average income of at least €1.8m in that period. Those earnings did not include income from the disposal of property, capital or sales.
While income figures for 2003 are not yet available, it is believed each of the high earners would have earned at least €2m that year if the income from the disposal of property and similar assets was factored in.
Mr Bruton said some of the country’s highest earners were using special incentive schemes to write off an average of €500,000 in tax each year.
“Such a situation is an affront to the ordinary compliant taxpayer, particularly when many of the tax incentives being used had wholly outlived their original purpose and were serving only to pump up an already booming property sector,” he said.
However, Tánaiste and Finance Minister Brian Cowen said measures taken in Budget 2006 would “greatly restrict the availability of special tax incentives — especially in the property sector — and reduce the ability of high earners to offset these reliefs against annual income”.
He also pointed out that, the top 1.5% of income earners pay more than a quarter of all income tax.
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