Dr. Tom McDonnell:

In the supplementary materials, the graph is on page 12. There is also a table entitled, "Comparison: Income Tax plus Employee Social Security Contributions in 2016 as a Percentage of Gross Wage Earnings", which looks at the single personal average earnings for Ireland, the other EU 15 countries, the United States and the OECD as a whole. The total payment is 19.2% according to the OECD, which is the lowest in the EU 15. For example, the United Kingdom has 23.3%. The EU 15 average is over 30%. Even countries like the United States have a higher level of tax. It is simply not factually correct to say there is an onerous burden on the average earner. The reason for that is the system of tax credits, which keeps the effective tax rate really low. Even though the marginal rate kicks in quite early, the effective tax rate that people are actually paying is quite low for most of the distribution. The tax wedge as a percentage of labour costs is lower again because employer PRSI is so low in Ireland compared with comparator countries. It is important to bear that in mind.

Ireland has issues relating to costs. We have high costs in a number of areas such as child care, rent, groceries and so on. The focus should be on dealing with those specific issues in a targeted fashion rather than narrowing the tax base further, which I understand may be about to happen in the coming weeks.

Given that we are talking about a fiscal space of about €330 million, the full-year cost of increasing the standard-rate cut-off point by €1,000 would be a little over €200 million. We believe that would be a poor use of the existing fiscal space. It would be better to deal with areas like child care, education, infrastructure and so on.