IMF Says Taxes On Irish Wages Among The Lowest In The World

by Jason Gorringe, Tax-News.com, London

12 August 2002

In a new report on the Irish economy published last week, the International Monetary Fund revealed that although taxes on wages and profits in the Republic of Ireland are among the lowest in the world (beaten only by Australia, Britain, New Zealand and Korea of the 25 countries surveyed), taxes on consumption are among the highest, with only Denmark, Norway, Finland and Hungary imposing higher sales taxes.

Despite suggesting that the country's low corporate tax rates may have increased revenue, however, the IMF was fairly gloomy in its growth predictions for this year, criticising the coalition government for failing to sufficiently rein in public spending, and forecasting GDP growth of just 3.2% this year - significantly lower than the majority of estimates offered by other bodies, some of whom have predicted growth rates as high as 7%.

Suggestions put forward by the international body as to how the government could improve Ireland's economic position included revenue-raising proposals such as the reduction of personal tax credits, the introduction of a single rate of VAT for all goods and services, and the implementation of local property taxes.

Meanwhile, the latest Consumer Sentiment Survey conducted by IIB Bank and the Economic and Social Research Institute (ESRI) has indicated that the nation's confidence in Ireland's economic prospects has fallen significantly. The survey suggested that weak equity markers overseas, coupled with poorer employment prospects domestically were the primary factors behind this drop.

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