10% of self-employed set to earn €100,000

Almost 10 per cent of self-employed people will earn over €100,000 this year compared with less than 3 per cent of PAYE workers, according to new figures from the Department of Finance.

The figures show that, despite the continued economic boom, the majority of those registered to pay tax will earn less than €30,000 this year based on projections by the Revenue Commissioners.

Another set of figures from the Department yesterday shows the number of people in the highest tax bracket has risen considerably in recent years.

The Revenue Commissioners estimate that about 614,000 people will pay tax at 42 per cent this year, an increase of 26 per cent from the 487,000 people who paid tax at the higher rate in 2002.

The figures on tax-payers' earnings brackets show that 60 per cent of PAYE workers, or just over one million people, will earn less than €30,000 this year, compared to 52 per cent, or 112,000, self-employed people earning under €30,000.

Less than 3 per cent of PAYE workers, or 45,000 individuals, will earn over €100,000 this year. However, in the self-employed sector, that proportion rises to 10 per cent - 21,000 individuals.

At the top end of the pay scale, just 0.43 per cent, or 7,260, of PAYE workers will earn €200,000 or more this year, up from 5,740 in 2000-01.

In comparison, some 3.6 per cent of all self-employed people, or 7,750 individuals, will earn €200,000 or more in 2004 - up from 2 per cent of the self-employed, 4,210 people, earning that amount in 2000-01.

The latest sets of data on earnings and tax brackets were released by the Minister for Finance, Mr Cowen, to Mr Paul McGrath TD (FG) and Ms Joan Burton TD (Lab).

Mr McGrath said the information released to him also revealed that, in recent years, high-earners had been given significant tax breaks, while the unemployed fared much worse.

"The data shows that if you were a single person in 1999 earning €100,000 you paid around €43,000 in tax and PRSI combined. But by 2002 you paid around €35,000, so you were around €8,000 per year better off. If you contrast that with somebody on basic social welfare benefit, they are only around €500 per year better off. When you add that to the recent controversy over some 'super-rich' people paying no tax, you'd have to question if the Government's priorities in this area are in the right order."

Ms Burton said the increase in the numbers of people paying the higher rate of tax demonstrated the "impact of stealth taxes" which had been imposed by the Government since 2002.

"As I pointed out in my response to last year's budget, the biggest stealth tax of all has been the non-indexation of the standard rate band. The level of earnings over which people pay tax at 42 per cent has been stuck at €28,000 for two years.

"As wages have risen, this has pushed more and more taxpayers into the highest tax rate. Indeed, given the rate of growth in the economy at present, it is likely that more and more taxpayers will be pushed into the higher rate band before the year is out."

She said the Labour Party was calling on Mr Cowen to address the issue in the forthcoming Budget.

The latest figures come a few weeks after it was revealed that many of the State's wealthiest people pay no tax at all, by taking advantage of tax-incentive investment schemes.

Some 41 people earning over €500,000 paid no income tax in the 2001 tax year. The main methods used by those people to minimise tax were a range of property tax schemes extended to 2006 in the last Budget.