Income tax

Tax watchdog is optimistic that ‘surprising’ income tax haul can be maintained

The independent watchdog, which by law monitors the government’s budget plans, said the rise in income tax revenue was “surprising” but could probably continue nonetheless.

In a new study, the Irish Fiscal Advisory Council, or Ifac, said income tax revenue last year generated revenues of €26.7 billion, or some €4 billion. euros more than expected from this single tax source.

It was an unexpected bonus as employment levels came under pressure in the second full year of the Covid-19 crisis.

Ifac said the tax returns meant the so-called effective tax rate had risen to 24.4% and there was reason to be confident due to wage increases in the part of economy dominated by multinational corporations.

“But much of the tax strength comes from strong job and wage growth in high-wage, high-tax sectors, including information and communications technology and finance,” he said. declared Ifac.

“These high-paying sectors have continued to do well during the pandemic,” the watchdog said.

Treasury figures show that the four main sources of taxation – income, VAT, corporation tax and excise duty – flourished last year.

Ifac and other economists had previously focused on the huge increase in corporate tax revenue, which at 15.3 billion euros last year almost matched VAT returns.

The reason for the corporate tax premium was also attributed to multinationals whose exports continued to thrive during the Covid-19 crisis and made more profits and paid more corporate tax to the Irish Treasury Consequently.