Ireland ranked among worst countries for income tax burden on workers

"An international think-tank has rated this country 37th out of 38 countries on individual taxes due to the fact that the highest rate of income tax kicks in at relatively low levels of income, and because dividend income from shares are so highly taxed. Our system means most of the income tax is paid by middle and higher earners, with most low-income earners are exempt."

"The US-based Tax Foundation found Ireland is the second-worst among the countries that are members of the Organisation for Economic Co-operation and Development (OECD) when it comes to individual taxes. Only Korea was ranked lower than Ireland for the competitiveness of its income tax system. The Tax Foundation report comes weeks after the Budget failed to give workers a tax package, which means those who get a pay rise will see more of their income taxed at the higher 40pc rate. "Ireland's personal tax rate on dividend income of 51pc is the highest among OECD countries," the index found."

"The Washington-based Tax Foundation report said high marginal income tax rates affected decisions to take up work and to accept overtime. It also found that standard VAT rate of 23pc in this country is one of the highest in the OECD and applies to a relatively narrow tax base. But the foundation pointed out that this country has what it said was a low corporate tax rate of 12.5pc. Tax experts said the progressive nature of the Irish income tax system had led to the low score from the Tax Foundation."

Ireland ranks near the bottom among peer countries for individual tax competitiveness, driven by high personal and dividend taxes and a narrow VAT base. Middle and higher earners carry most income tax burdens while many low-income earners are exempt. The top personal tax rate of 40% applies at relatively low income thresholds, and dividend income faces a 51% rate, the highest among OECD members. The standard VAT rate of 23% is high and covers a narrow base. The corporate tax rate remains low at 12.5%, but high marginal personal taxes are reported to affect work and overtime decisions.

Read at Irish Independent