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Earn a euro, lose 175 euro
Read more about: Economy, Taxation
That’s the deal now on offer to those workers making just above the minimum wage. RTE on the inevitable income levy climbdown –
The Government has decided that people earning up to the minimum wage of €17,540 per year will be exempt from the 1% income levy announced in the Budget.
However, anyone earning above this level will be charged the levy on the full amount of their income.
Thus if you make €17,540, your income levy is zero. If you make €17,541, your income levy is €175.40. Lesson: don’t work for that extra euro.
That’s why income tax increases should be done through the income tax system.
Yikes people will be trying to get around this. Is there away can you take write offs before this.
This whole budget looks like it was rushed. (as it was) They are making this up on the fly
Eamon Gilmore to his credit saw this issue immediately in the Dail today. Here is how Cowen answered:
The Taoiseach: To answer Deputy Gilmore’s question, as he knows, this is a levy on gross income and, therefore, in respect of anything above that, the levy is applied on the full amount. That is the way it operates. A person on €18,000 a year, beyond the minimum wage, will be asked for a contribution of €180 for the year, or €3.50 tax. In the past, Deputy Gilmore was a member of a Government which probably charged them 26% tax on practically all that income. The person has one twenty-sixth of the burden he or she had in 1997 when Deputy Gilmore was Minister of State in the Department of the Marine.
That is the way the levy system works. It was the way it worked when it was introduced in 1992-93 under a Fianna Fáil-Labour Party Administration. It was also a temporary levy at that time. From memory, it applied to people on half the industrial wage which at that time was only €9,000. We are a long way beyond that now thanks to successful policies implemented in the interim.
The government are claiming this will only cost 50million but that would seem to indicate the averages earnings from the 750,000 odd (1/3 of the workforce of 2 million plus) who are not in the tax net are 6/7K per year. And that just doesn’t sound right to me. And I’m minded that these are the self same bright sparks in the department of finance who estimated the Golden medical cards cost at 15/20 million only 7 years ago.
Cash-under-the-table anyone?
Cash-under-the-table anyone?
Strong incentive for a low wage worker on overtime to do the overtime that way.
Yes, this is descending into a fiasco.
Could it be a “voluntary” 1% contribution, similar to the minister’s voluntary 10% reduction. That suggestion is meant to be a joke, but the whole situation is so bizzarre it is hard to know what is for real and what is a joke.