Tax and Transfer Pricing

Irish PM pledges to increase Top Income Households

Many nations using democracy as a means for political leadership would most likely have an unstable policy outline around another election year. Being a politician virtually all politicians wants to be re-elected and his/her party wants to remain in government. Around election period; new, temporary and somewhat unstable policies would be announced to attract the large electorates, especially if performing rate of the leader by the electorate is unsatisfactory.

Ireland’s prime minister on November 14, 2018 pledged to remove more workers from paying the highest rate of income tax by increasing the threshold by more than a third if his government continues in office for the next five years.

Ireland started reversing years of savage spending cuts and tax hikes in 2014, about the time its economy began to rebound from a deep financial crisis, but at 35,000 euros, the top rate of tax is still applied to a single person on a below average full-time income.

Vardkar, the Irish Prime Minister said:  “it discourages parents from returning to the workforce, discourages people who emigrated from coming home, and makes it harder to attract good jobs and talent to Ireland. It is holding our country back,” he said of the threshold which has gradually risen from 32,800 euros over the last five years”.

Varadkar’s pledge is mostly dependent on his Fine Gael party winning re-election. He is currently in talk with the main opposition party to renew an expiring government cooperation deal for one more budget before an election he wants set for mid-2020.[1]

One would think this common phenomenon in Africa is limited to Africa alone, but as humans it’s a drive that cuts across color skin or climate. As Lord Acton opined “Power Corrupts…”.  May be the only explanation on why leaders choose to engage in what might harm the future of the nation’s economy trust in a bid to be reelected. In some cases as obvious in Nigeria, failure in government achieving her manifesto is alarming, even at the campaign every economist knows there is not such capacity by government to fulfill the promises.

References

[1] https://uk.reuters.com/article/uk-ireland-budget-tax/irish-pm-pledges-to-increase-top-income-tax-threshold-idUKKCN1NM0MC

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