Taxed to the hilt!

...average family pays €150 in indirect levies per week

THE average family spends over €150 every week in ‘indirect taxes’ such as VAT and carbon levies, a report has found.

Irish households pay an average of €151 per week in indirect taxes, which amounts to 13% of household spending or 12.6% of household income.

The Oireachtas Parliamentary Budget Office study released yesterday showed that low income families feel the pinch of such charges much more keenly.

The poorest 10% of households pay an average of €88 per week in indirect taxes. That’s almost 30% of household income and over 14% of household expenditure.

High-income families – regarded as the richest 10% of households – pay more in cash terms at an average of €216 per week, but that represents just 7.9% of household income and 10.5% of expenditure.

The report brands the indirect taxes as ‘regressive’ as they ‘consume a larger share of low-income households’ resources’.

Social Democrats TD Catherine Murphy said: ‘I’m not a bit surprised as low-income families spend all of their money so indirect taxes are obviously going to impact them.’ The situation is also ‘fundamentally unfair’, according to economist Michael Taft, of Siptu.

The report highlights the scale of indirect taxes paid by Irish households. The analysis uses a system called the Expenditure VAT and Excise model, which uses expenditure data from Irish households.

The study describes VAT as the largest and most regressive element of the indirect tax system.

On average, VAT paid by Irish households amounts to €113 per week – this is equivalent to 8.7% of household income or 8.9% to household expenditure.

Low-income households – defined as the poorest 10% – pay €58 per week in VAT, equivalent to almost 20% of their income or 9.5% of expenditure.

But high-income households – the richest 10% of households – pay €159 per week in VAT, equivalent to less than 6% of income or almost 8% of expenditure.

It also says the carbon tax rises due soon are ‘regressive’.

The tax is scheduled to increase annually to tax carbon at €100 per tonne by 2030. The poorest 10% of households face an increase in indirect taxes (carbon tax plus VAT) of €4.60 per week – equivalent to 1.5% of household income.