Eoghan Murphy

Murphy to publish Tax Transparency Bill

Posted March 21st, 2012

Following the announcement today that the UK Chancellor is to give each tax payer in the UK a detailed breakdown annually of how the government spends their taxes, Fine Gael TD Eoghan Murphy (Dublin South East) has called on the Irish government to do the same. Murphy has been preparing a Tax Transparency Bill and is to publish it shortly.

Commenting on Chancellor Osborne’s announcement, Murphy said: “Ireland should follow the UK’s lead here in bringing greater transparency to public finances and highlighting the relationship between what people pay in tax to central government and how that money is spent.”

“When I heard of Ben Gummer MP’s proposal back in January I thought it was an interesting idea. My office was in touch with his and we’ve been doing our own research and work on a ‘Tax Transparency’ Bill since then. The Bill is at an advanced stage and we should be publishing it before the Easter recess. It won’t look too different to what the UK Chancellor has announced today. It’s a good idea and we should adopt it.”

“Open government is good government. We have a responsibility to let the people know directly how we are spending their money. They can then make their own judgements after that. But overall it should greatly inform the debate that the public has before and after each new budget. It’s especially relevant at the moment given that we are engaged in such a dramatic correction of the national finances and money is scarce.”

The Bill will include the central element of an annual statement to taxpayers, summarising how the tax they paid was spent in the previous year and then breaking that amount down in to percentages and the actual monetary amounts that were allocated to different areas. It would give a breakdown of money spent on behalf of each individual on things like education, health, social welfare, debt repayments and government itself for example. Estimates for the coming year would also be provided.

“We’re still doing work on putting together some examples of the kind of information such a statement would provide, but very roughly, if we were to take just the 51.9 billion allocated by the government for current spending in 2012 (gross voted): a single person earning €60,000 would see that they had spent a total of €20,067 on taxes (income tax, PRSI, USC). The statement would then break this figure down and show that 17% or €3,411 of their earnings had been spent on Education, 26% or €5,217 had been spent on Health, and 40% or €8,026 had been spent on Social Protection.”

Two additional elements to the Bill will be a VAT calculator on the Department’s website which would assist people in estimating their previous VAT payments in the year and would perform a similar function to the annual statement on income tax. The other element is a proposal that would see all single expenses or payments over five thousand euro incurred by a Department published in real time on that Department’s website. “This would help people to follow the money from their own statements to the relevant Department’s spend” according to Murphy.

“I haven’t had a chance yet to sit down with Minister Noonan about this but I hope to soon. We still have some holes to fill, like when in the year the statement might issue for example. Of course this is all dependent on the Minister and the government accepting the Bill.”

Note: Re example, tax case is taken from Budget 2012, illustrative cases, example 9. Current spending percentages for 2012 (gross voted) is taken from Revised Estimates for Public Services 2012, pg.9. The example is illustrative only and more detailed examples will be provided with the publication of the Bill.