She is looking at a number of car options, but all cost about €15,000. Assuming she wants to do this from hard-won savings, that sum implies she had to earn over €30,000 at marginal tax rates to produce the needed amount.
The Government, on behalf of you and I, already scooped over €15,000 from her in income taxes, but that is only the start of it.
The cars she is considering carry enormous tax charges. It is estimated an average new car in Ireland costs about 30% more than across the east of Europe.
That suggests an additional burden of €5,000 is being extracted from my cousin and this is before the taxes related to annual motor rates. It is also before she takes the car for its first petrol or diesel fill.
For every €100 spent on fuel no less than €60 goes directly to the Exchequer and we have the dubious honour of being the fourth most expensive country on the planet for petrol. Being a reasonably heavy car user, our driver will probably spend over €5,000 per year on fuel and pay over €3,000 of that to our public representatives.
All of this adds up to a very telling insight to how much Irish citizens are exposed to very large tax burdens.
I keep hearing casual references to Ireland being some sort of tax-free haven where we are either wallowing in cash or underfunding the country’s needs.
That perception then converts into an argument that personal taxes are a legitimate target for increased rates under our next government.
This debate is confused by the 12.5% corporate tax issue, which has been a long-standing and cornerstone element of the Irish economy’s success. It would, however, be a grave mistake to imply that Ireland’s company tax policy in some way signals an easy ride for the general population.
The evidence points in a different direction.
Of course, taxes are garnered to fund the running of the State. A civilised society requires a social welfare, education, health, policing and administration infrastructure to function properly.
Every time I look at the hefty tax take in my monthly pay packet I justify it on the basis of the experiences many members of my family and friends have had in schools and hospitals or when supported by An Garda Síochána at the scene of an accident or burglary. Keeping those essential services intact should be in all our interests.
Yet, there has to be a limit to what any democratically elected government can extract from its citizens.
Since the global financial crisis in 2008, and the accompanying collapse in the Irish economy, a wide raft of new taxes, increased rates and tighter allowances have been introduced to help combat a struggling economy.
Letting up on any of these will undoubtedly be a challenge, but any thoughts of adding to the list of tax burdens should be fiercely debated.
A growing economy, de facto, raises Exchequer returns simply because activity levels increase.
If the Irish economy is growing at a rate of about 3%, for example, it should be capable of increasing tax revenues by a similar amount, which, in an environment defined by low inflation rates, should allow the Government to function adequately.
Any plans to raise the absolute level of tax revenues above current levels risk tampering with a population whose patience has been tested to the full. The water charges maelstrom proved a tipping point in that context.
My relative, who is looking for a practical car to go about her normal day’s work, is another live example of how deep the tax take already is. Enough is enough.
Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.
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