Dr. Donal de Buitléir:

On the issue of progressivity, it is important to be clear on what I mean by this. As one moves up the income distribution ladder, one pays a higher percentage of one's income in tax. That is how I define it. If one considers it, the basis for my statement that Ireland has the most progressive tax and transfer system is the OECD numbers which show the pre-tax and transfer Gini coefficient and the post-tax position; it is not just two particular points of income distribution, although some measure it in that way. Incidentally, if one does measures it in that way, one gets the same answer, but looking at it globally, unless the OECD is wrong, it is an incontrovertible fact that Ireland has the most progressive tax and transfer system in the OECD. It is a question for politicians as to whether that is good or bad, but to my mind, it is a fact. If one looks at the numbers, for single people on half of average earnings, we have the lowest tax burden in the OECD. For a single person on average earnings, we are about in the middle of the pack and as one moves up to two and a half times average income, I believe we are ninth. As one moves up the income distribution scale, Ireland climbs towards the top in the OECD. We will probably never get to the position that obtains in Denmark, but at the bottom, the differential between Ireland and Denmark is in the mid-teens.

Those on low incomes in countries with progressive systems pay relatively high taxes, although they receive a lot of services in return. I assure Senator Marie-Louise O'Donnell that the tax system in Ireland, no matter how it is measured, is highly progressive. At 52%, while not the highest in the OECD, our marginal tax rate is not too far from it and is not the lowest. It hits at a low level of income in Ireland, at about average earnings for a single person, whereas in Germany it hits at six times average earnings. Belgium is nearest to Ireland. If members are interested in pursuing these questions, I am happy to spend hours talking about them and our office is just around the corner.