45126-Invest. Qual-No111

Investment in Qualityillustrated in Table 7.1 which shows the average tax paid by anemployee on various percentages of average industrial earnings.Average earnings for industrial workers in manufacturing (based onCSO weekly earnings) are taken as IR£10,070 in 1987 whileaverage earnings are estimated at €24,800 in 2002 and €26,000 in2003. Changes to discretionary tax allowances are ignored in thisTable. For a single employee on average industrial earnings, theaverage tax rate fell by almost 20 percentage points in the periodfrom 1987 to 2003. High income employees (as represented bythose earning 250 and 500 per cent of average earnings) receivedsimilar (but slightly lower reductions) in their average tax rates,although the value in real money terms was substantially higher forsuch high earners. Some employees will have an increase in theiraverage tax rate in 2003 (due mainly to holding the standard rateband constant in money terms), although this increase is verymodest in comparison to the reductions that have taken place overseveral years.TABLE 7.1Average Tax Rate (Percent of Gross Wage) at Various Percentages ofAverage Manufacturing Earnings50% 100% 250% 500%1987/88 22.0 35.4 50.8 54.91993/94 21.2 32.4 44.9 48.12002 2.4 16.1 32.8 38.52003 2.2 16.1 33.1 38.6Change 1987-2003 -19.8 -19.4 -17.8 -16.3Value of tax reduction € 2,574 € 5,044 € 11,570 € 21,190Income level in 2003 € 13,000 € 26,000 € 65,000 € 130,000Source: NESC Secretariat calculations.Notes: The value of the tax rate reduction has been calculated by applying thechange in the average tax rate to the 2003 income level. It shows thedifference between the tax paid in 2003 and the tax that would have beenpaid in 2003 if the 1987/88 average tax rates applied.294