Public still confused by tax system Sunday, June 14, 2009 By Post Reporter More than 40 per cent of taxpayers are not confident that they are claiming all the tax reliefs to which they are entitled, according to a new Irish Taxation Institute survey.
It shows some improvement in understanding of the tax system since the last such survey in 2006, but suggests that tens of millions of euro in tax reliefs are still not claimed by PAYE taxpayers. The survey also shows considerable public opposition to the idea of a new property tax.
According to the survey, 63 per cent of taxpayers feel they fully understand the income tax system, up from58 per cent three years ago. Now, 59 per cent believe they are claiming all the tax reliefs to which they are entitled, up from 55 per cent.
However, this still shows a significant minority who are not claiming all their reliefs.
This is backed by other survey findings, where specific questions were asked about claims for items such as medical expenses and refuse charges. The survey, which was undertaken for the Institute by Red C, suggests a gradual improvement in taxpayer knowledge.
However two out of every five taxpayers were not confident that they understood all the information on their certificate of tax credits and standard rate cut-off points.
The new income levy and the increased health levies seem to have increased confusion.
Over half the taxpayers surveyed said they did not fully understand how these levies were calculated.
Showing some acceptance that the government needed to act to start correcting the public finances, more than half agree that the supplementary budget tax increases were necessary. However, many still believed that the overall tax burden was unfair.
Taxpayers also believe that new taxes are coming soon.
Around six in ten of those surveyed expect a new annual property tax to be introduced in the next budget. However, just 40 per cent said they would prefer a property tax to further income tax increases.
Some 52 per cent disagreed that a property tax would be preferable to more income tax and, with another 42 per cent ‘‘disagreeing strongly’’, it is clear that the government faces considerable political challenges this year.
More than half of those surveyed said that any property tax should be linked to a change in stamp duty.
The survey also showed that tax relief was a powerful incentive for encouraging people to invest in their pensions, suggesting that any reduction in this relief could see a reduction in the voluntary element of pension contributions.
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