Saturday, March 20, 2010
Taxes, taxes, taxes
The other day I went into the Citizen's Information Bureau to ask about whether we were allowed to have chickens (yes). The Citizen's Information Bureau is something special... it is an office in Maynooth where 3 people hang out waiting for you to arrive and ask questions about... well ANYTHING. Given the current economic crisis in Ireland, and the fact that you can have free access to information on the computers in the library... I imagine the office will not last much longer.
Anyways, when I went in on Thursday I got: the guide to living in Ireland (lots of good facts), advice on how to stop junk mail, chicken info, but I managed to stymie them with my questions on taxes. They just couldn't understand my question about when we would need to file our taxes.
Eventually I figured it out... in Ireland you don't have to file taxes. Basically, your employer deals with all that for you and takes the tax off your salary. This works because the tax system here is super simple. This leads into my ...stupid Canadian tax system rant... as we are filing our taxes today. I'd love some comments on my rant... perhaps some defenders of the Canada Revenue Agency, if only because then I'd be sure someone was in fact reading this blog.
Anyways, in Ireland there are simple tax brackets, with similar tax rates to Canada. Also, there are very few deductions (read: ways of manipulating the tax system). In fact literally the only deduction Brad is able to get is a renter's deduction. This is a fabulous deduction equal to 20% of our rent, or €200 monthly! The idea being that our landlords will be paying that €200 to the government as earnings on our rent, so we shouldn't be paying it too. It's also a powerful deduction because it directly benefits lower income people, as they are the most likely to be renting. It also prevents people from renting illegal suites, because they would want to benefit from the huge tax savings.
Most of the other "tax deductions" available to Canadians are in fact provided as "social benefits" in Ireland. IE. you get the money outside of the tax system, so it's not as though the benefits are lost, they just are directly provided to people who actually need them. After going through the ridiculous paperwork of our Canadian taxes today, I realized that it's basically a living history of various campaign promises and bribes to the voting public. It provides the general "appearances" of providing for the lower income families (we can't tax you very much if you are barely earning a living wage) while not directly providing services to low income families. I mean really, what is more beneficial: a tax deduction for using public transit for commuting at the end of the year (available to every tax payer equally), or providing low income commuters with cheaper transit passes at the time of purchase?
Given all the effort that Brad and I have made to "optimize" our RRSP contributions and figure out who should claim which taxable incomes and deductions, it is clear that our tax system benefits those who are good with a calculator, and completely fails to serve those who really from need the social benefits. --like what is up with the Children's Fitness Tax Credit?-- From this side of the pond it seems like a ridiculous circus... and I could go on with more examples, but I think I'll stop now.
Pic above, is Nikolai awaiting the St. Patrick's day parade.