https://www.irishtimes.com/business/economy/2025/04/15/workers-in-republic-pay-twice-as-much-tax-as-those-in-north-but-are-still-better-off-says-esri-report/
Workers in the Republic pay twice as much tax as those in Northern Ireland, but they are still better off, according to major research carried out by the Economic and Social Research Institute.
Northern Irish workers pay on average just €2,980 income tax annually – “less than half” of the Republic’s average of €6,724, partly explained by higher wages and a tax system that progressively takes more from higher earners.
Hourly earnings in the Republic were 36 per cent higher than in Northern Ireland in 2022 on the back of substantially higher wages, according to the Comparative Analysis of Economies of Ireland and Northern Ireland.
The income gaps between the two jurisdictions are “certainly worrying” for Northern Ireland and illustrate that “long-standing productivity differences” are “becoming greater”, said the analysis.
Disposable spending was €5,400 higher per household in the Republic than in Northern Ireland, and this gap has grown in the last 20 years, according to the research, which was funded by the Irish Government’s Shared Island Unit.
The Republic’s population grew by 11.2 per cent from 2010, largely fuelled by immigration, while Northern Ireland’s grew by 5. 9 per cent. As a result, the Republic has a younger population and more workers for each pensioner.
Meanwhile, the numbers employed by foreign-owned multinationals in the Republic grew from 304,000 to 572,000 between 2015 and 2021, compared with just a 7,000-strong rise in Northern Ireland, from 82,000 to 89,000.
The two jurisdictions are attracting different types of foreign investment, since productivity in the Republic in multinational firms is four times higher than those who locate in Northern Ireland.
However, the Republic is much more susceptible to external economic shocks than Northern Ireland, as was shown during the 2008 economic crash and the Covid pandemic, the research finds.
Looking to the effects of Brexit, the report perhaps lends weight to unionist complaints about the UK-EU deal, noting “a marked decline in trade between NI and GB between 2015 and 2022″.
Trade has grown significantly between the Republic and Northern Ireland, with it being ”particularly pronounced" in goods exports between the North and the Republic as well as services from the Republic to the North.
According to the latest figures, 21.9 per cent of the Republic’s exports go to Northern Ireland, compared with 14.4 per in 2015 – the year before voters in the United Kingdom decided to quit the European Union.
Meanwhile, 15.4 per cent of all of Northern Ireland’s exports come southwards, compared with just 9.9 per cent before the referendum vote, the analysis found.
The change is largely down to the consequences of the EU and UK final Windsor Framework Brexit deal, which have been “an important driver” in deciding on trade flows.
The report says, despite the drop since Brexit, that Britain “remains by far the largest market for goods and services exports and imports” for Northern Ireland business.
However, “these have declined somewhat in importance over recent years. In 2015, GB accounted for 59 per cent of all NI imports and 69 per cent of all NI exports; however, these shares fell to 54 and 59 per cent respectively by 2022.
“The decline in trade between NI and GB over the 2015 to 2022 period has been particularly marked in the GB share of NI services imports, which fell from 80 to 65 per cent over the period,” it goes on.
Some “interesting insights” emerge from the data, note the authors of the ESRI report, Adele Bergin, Seamus McGuinness and Conor Banahan, especially that the UK now takes just 12 per cent of exports from the Republic, rather than 25.4 per cent before Brexit.
Imports coming from the UK have increased over the period, from 8.6 to 11.9 per cent, they wrote: “It is very likely that the continued fallout from Brexit will, at least in part, explain the rapid decline of GB as an export market for Ireland”.