Paul Nicholas Gogarty
Question:21 Mr. Gogarty asked the Minister for Finance the measures which exist to measure average disposable income, being income available after taxes, direct and indirect, levies, fees and charges. [9758/03]
Written Answers - Income Measurement.
Average disposable income, in the terms in which it is described by the Deputy, is not measured by my Department. However, it is the case that, for indicative purposes, my Department compiles data over time on what would be in any year the average tax rate for a single person on the average industrial wage. The average tax rate is the aggregate value of income tax, health levy and PRSI deductions as a percentage of gross income but it takes no account of particular additional credits etc. that might be claimed. It is influenced by changes in the average industrial wage as well as changes in the income tax, health levy and PRSI regimes.
A figure for disposable income, being the gross wage less aggregate deductions, is produced. As this figure relates to the "average" industrial wage, it is not unreasonable that it might be regarded as "average disposable income", that is the disposable income of a person on the average industrial wage. However, as is clear from my explanation, the figure does not take account of expenditure incurred by that person and any changes in expenditure that might be affected by fees, charges, or indirect taxes in the terms described by the Deputy. In addition, I might point out that the annual budget booklet contains tables which indicate the changes, since 1997, in the average tax rate on a number of sample income levels for various classes of income earner. These tables do not include any data relating to disposable earnings.
I understand that the Central Statistics Office measures average weekly disposable income in the context of its household budget survey, which is currently carried out every five years. The survey, which is based on a representative sample of about 8,000 households, collects detailed information on all sources of household income and related taxes, which allow the calculation of gross and disposable income. For the purposes of the survey, household disposable income is defined as gross income less direct taxation – i.e. income tax, social insurance and levies. However, indirect taxes such as VAT and duty or fees and charges are not included in this measure.
I might point out also that the OECD, in its annual publication "Taxing Wages", usually produces comparative data on the average tax rate relating to the average production worker. Here again, however, the emphasis is on the level of taxation and social insurance type contributions rather than on disposable income.