Almost half the tax generated by the Government last year, equating to almost €45 billion, came from taxes on income, according to the Central Statistics Office (CSO).
The figures show that €44.7 billion in revenue came collectively from income tax, corporation tax, universal social charge (USC) and capital gains tax, a 23 per cent increase on the previous year.
This was largely driven by increased income and corporation taxes, the CSO said, noting that the income “category has been increasing steadily since 1995 when €7 billion in receipts was generated”.
Income tax reached record levels in 2021 at €23.4 billion, accounting for a quarter (25 per cent) of all taxes generated in the year, while corporation tax receipts have increased significantly over the last 20 years. They reached a record €15.6 billion in 2021, up 28 per cent year on year.
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Receipts from the business tax have surged again this year and are expected to rise to €21 billion for 2022.
Marian Ryan of consumer advocacy group Taxback.com said the report raised serious questions about how fair the Government was being on PAYE workers – and the extent to which the Government was relying on corporation tax to boost its coffers.
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While the rise in income tax receipts “could certainly be an indication of the growing wealth and higher earnings in the country, it is also proof that Irish workers today are being hit with much higher taxes than was the case in 2000”.
“Much of the tax hikes of the austerity years of 2009 to 2013 are still with us today – including the universal social charge and the local property tax,” she said.
Austerity years
“We also lost valuable tax breaks during the austerity years which haven’t seen the light of day since. For example, the amount of tax relief you can claim on medical expenses was halved during the austerity years and that has never been reversed,” she said.
The CSO figures show total tax revenue in 2021 amounted to €93.3 billion, which included €68.4 billion through the cash-based exchequer system. The residual comprises mainly of social insurance (PRSI) contributions paid into the national social insurance, outside of the exchequer.
Taxes on products accounted for 28 per cent of taxes, including VAT of €17 billion and excise duties of €6 billion.
VAT in 2021 showed a 30 per cent year-on-year increase. However, the comparison with 2020 is affected by Covid restrictions which saw VAT receipts decrease by 16 per cent.
PRSI generated €12 billion in revenue in 2021, up 12 per cent on 2020 receipts.
Commenting on the release, Elaine O’Sullivan, statistician in the CSO’s government accounts division, said: “Looking at the data, Covid-19 restrictions impacted some tax revenues in 2020 but in 2021 we see a return to more normal tax receipts.”
