The European Commission's report highlights the uneven distribution of tax revenue in Ireland, noting that 37% of earners will pay no income tax this year. With 60% of tax yield coming from the top 10% of earners, the Commission warns about the vulnerabilities created by this concentration. Ireland's reliance on foreign multinationals exacerbates the issue, as labour tax revenues fall below EU averages. Recommendations include diversifying revenue sources and expanding the local property charge to enhance public finances and mitigate risks associated with economic fluctuations.
Ireland's labour-tax system is highly progressive, but it relies on a narrow tax base. The top 10pc of taxpayers accounted for approximately 60pc of the tax yield in 2022.
To cope with high projected budget expenses, diversification in Ireland's public revenue structure is warranted. Ireland's share of labour taxes as a proportion of GDP is not even half the EU average.
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