The Irish Times view on the tax system: open to manipulation

The disclosure by the Comptroller and Auditor General (C&AG) that some of the richest people in the State pay less income tax than the average industrial worker should prompt a serious examination by the Government of how the tax system can be manipulated.

The report showed that many of the country’s richest people, with more than €50 million in assets, pay relatively small amounts in income tax by using tax credits and reliefs to reduce their bills to derisory amounts. A huge variation in the amount of tax paid by the 334 high net worth individuals examined was revealed in the report. Just 10 taxpayers accounted for 85 per cent of the total tax take of €473 million from the group.

Some of them declared little income for tax in this country, presumably on the basis that they are tax resident elsewhere, while others used a range of credits and reliefs to shelter their income from tax. It is extremely difficult for the authorities to devise a tax system that is not open to exploitation by the very wealthy, who can employ top accountants to limit their liability. In spite of various efforts, the report makes clear, the system is still open to serious manipulation.

If this is how the Department of Health runs its own affairs, is it any wonder that the health service is in such a mess?

That is not to say that our tax system is fundamentally flawed. We do have a highly progressive system under which the bulk of the tax is paid by those on high incomes while low income workers pay less than their counterparts in other European Union states. However, the ability of a handful of extremely wealthy people to avoid tax threatens to bring the whole system into disrepute.

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Another shocking finding in the C&AG's report is that the new Department of Health headquarters on Baggot Street in Dublin lay empty for 17 months at a cost to the taxpayer of €15.8 million.

The reason for the delay was protracted disagreements with department staff over the internal layout of the building, with particular objections to the open-plan office space and the provision of meeting rooms and specially designed items of furniture. If this is how the Department of Health runs its own affairs, is it any wonder that the health service is in such a mess?