Desludging the Irish Tax System

Disclaimer: I sometimes discuss live policy issues on this blog. All opinions expressed are my own and do not represent the views of LSE or any other entity. 

The Irish Revenue Service has a solid track record of engaging with behavioural science and related literature e.g. see their 2017 working paper outlining a range of experiments and data work over the previous decade. (See also a paper from the Irish Department of Finance on behavioural economics and tax policy here). Recently, the Irish government have been engaging in a campaign to help citizens avoid overpaying tax. Some details here (thanks to my colleague for pointing this out). The key point is below. As can be seen, as well as pointing out the significant amount of under-claiming of allowances, the campaign also serves as a reminder to include additional income. So in some sense, it is a standard payment prompt but the salience given to under-claiming and the significant amount of resources being put to assist and nudge people towards claiming allowances is interesting in terms of both potential impact and distributional effects. The level of underclaiming suggested in the press release also seems quite striking. 

Today, (23/01/2024), Revenue published a range of statistics on PAYE for 2023. These statistics show that over 472,000 PAYE Income Tax Returns have been processed for 2023, an increase of almost 30% on the same period last year.

Approximately 275,000 of the returns filed to date resulted in an overpayment of tax. Among the key tax credits and reliefs claimed by PAYE taxpayers are the rent tax credit and health expenses. The facility for PAYE taxpayers to claim the 2023 mortgage interest tax credit will be available from next week.

Revenue, in conjunction with the Minister for Finance, Michael McGrath T.D., today launched a public information campaign to raise awareness among PAYE taxpayers about the range of tax credits and reliefs available, and how they can claim those credits and reliefs. The campaign also reminds PAYE taxpayers that they need to tell Revenue about any additional income which has been earned outside the PAYE system.