Persons on low incomes are entitled to refunds of many withholding taxes. The results of these two factors are that withholding taxes probably do not reduce the number of taxpayers the Revenue has to deal directly with. The second main argument for withholding taxes was that they counter tax evasion. But the same result is achieved by a comprehensive system of reporting of payments. The Irish tax system is now very close to such a comprehensive reporting system so that withholding tax adds little or nothing to that.
Withholding taxes do have severe disadvantages.
They considerably increase the overhead costs of conducting business, creating wealth, and providing employment. They are also a trap for the innocent but unwary. Most people who have experienced Revenue audits will know by now that the focus of the audit, and the centre of the taxpayer's fears, are not the taxpayer's own affair, but rather the operation of the multitude of withholding taxes for which he is responsible. It is in the area of PAYE that many Revenue audit issues arise. Even PAYE presents its complexities, not least in determining whether a person is employed or self-employed.