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RARELY HAS AN independent report landed on the government’s desk and made such as splash as this week’s one from the Commission on Taxation and Welfare.
The printers were still cooling on the 547-page report when Tánaiste Leo Varadkar was already out to dismiss some of its conclusions. Taoiseach Micheál Martin came out the following day to say he didn’t agree with the Tánaiste.
The report, which was commissioned by the government, came about after Fianna Fáil, Fine Gael and the Greens agreed to seek a major review of Ireland’s taxation system for the decades ahead.
The parties promised that the commission would look at the future of taxation in the context of “ageing demographics, the move to a low-carbon economy, and the rise of digital disruption and automation”.
The Commission was made up of variety of sources and experts from areas including tax and welfare, business, unions, and NGOs.
After 18 months, this week they were given their answer. Simply put, major changes are required if the State is to maintain the level of services it currently provides.
The reasons for this are many but chief among them are that; an ageing population will mean less receipts from income tax, the move from fossil fuels will mean less tax from related taxes and the bloated cash cow that is Corporation Tax cannot be relied upon.
Perhaps more difficult still to swallow is that, as well as these sources of taxation being likely to reduce, the overall level of tax take will have to increase.
The 14-person Commission chaired by Professor Niamh Moloney has been keen to stress that the timing of the report is not ideal, given pressures currently being faced by people, but that it’s about the challenges to be faced over the next 15 years.
What was recommended?
While challenges were outlined in the detail in the report, the Commission also published potential solutions.
These solutions amounted to a broadening of the tax base, essentially taking taxes from a wider variety of sources and ensuring that the overall take is more balanced.
In general, the Commission says the balance needs to be shifted away from the reliance on taxation that is based on income.
It’s a move that would make the tax system more sustainable and “limit the need for increases in tax rates”.
But while th Commission argues that Income Tax should be a less of a focal point of the overall tax take, it does not argue for a long-term decrease.
In relation to Income Tax, the Commission states that there should be no “further erosion of the Income Tax or USC base”.
Essentially, that theses taxes should not be cut over the long term, adding that: “Rates of USC should be determined by income level and not by any other eligibility criteria.”
Specifically, it says that “factors such as age or personal characteristics” should not be considered.
For example, people aged over 70 and those with medical cards (with less than €60,000 a year) are currently entitled to a reduced rate of USC. This would end under the Commission’s proposals.
If Income Tax is not decreasing, what additional taxes does the Commission want to see?
The Commission is clear that “the share of taxation from property and wealth is low and should increase”.
Specifically, the report says:
The Commission recommends that overall yield from wealth and capital taxes, including property, land, capital acquisitions and capital gains taxes should increase materially as a proportion of overall tax revenues.
It adds:
While the Commission is not recommending a net wealth tax; the yield from Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT), as well as from taxes on land and property, should be substantially increased. Distortions within the system, such as the treatment of death for Capital Gains Tax purposes, should be removed.
The call for an increase in CGT and CAT are among the recommendations that particularly irked Varadkar and led to him saying some of the Commission’s proposals were “straight out of the Sinn Féin manifesto”.
“Increasing inheritance tax, for example, increasing taxes on people’s savings. There’s no way that’s going to happen while Fine Gael are in government,” he said.
Inheritance tax forms the bulk Capital Acquisitions Tax receipts, €481 million out of €582 million CAT receipts in 2021.
Last year, an OECD report found that the gap in Ireland between those who are likely to inherit and those who are not is the highest of all the countries surveyed and that inheritance taxes are easier to collect than other forms of wealth taxation.
Other recommendations
The Commission’s recommendations are extensive and it has published a separate outline of its findings in a 38-page executive summary.
Included in the recommendations are:
VAT
Carbon Tax
Congestion charge
Property
Among the specific measures that have caused controversy is the suggestion that tax relief for private health insurance should be phased on on the basis of the implementation of Sláintecare.
Speaking this week on RTÉ’s Morning Ireland programme, one of the Commission members Professor Barra Roantree said overall it is about raising taxes but doing it in a way that is sustainable.
The recommendations that we’ve set out here, particularly think in relation to land, property and capital are about raising taxes in the most efficient way, in the most equitable way. In a way that comes with the smallest economic cost.
“Again, taxes do have an economic cost but we need to look at this into the future, we need to really address these difficult decisions and what we’ve set out here is an agenda and a roadmap for reform of the years ahead.”
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In fairness, workers out clearing roads are doing an amazing job. I had to detour around large fallen trees several times yesterday, and twenty minutes later one tree was gone and another was being removed. Hats off :)
Duvet day.
Any news on that tree we have entered for the “tree of the year” competition. Is it still standing.
Stay safe out there San Diego….
How come in America when there’s a major storm they shut down everything, transport , schools , flights etc, for the safety of the public, yesterday they should have done the same here, especially for families taking kids to schools, its amazing there was no one seriously hurt
Sure their be nothin done…
Because we are adults and should be capable of thinking of our own safety and the safety of our family. I did not need to be told to stay in unless it was an absolute necessity to go out. I looked out the window and came to that conclusion all by myself.
Go live in America so Nigel.
Nigel as bad as the storm in Ireland was yesterday the storms in America are far more extreme and that’s when they implement full shutdowns.
160kph gusts is extreme enough , I know some schools and companies that allowed people to stay at home and be safe and it was the first red alert storm we had. As I said its lucky there were no serious injuries
We need to make sure businesses (and home) are prepared for these types of events. It’s quite likely they will occur more often than we are used to seeing.
http://www.youtube.com/watch?v=aKystuzj0kM#t=0
Always make sure you have a plan B!
Massive power cuts… Cue a baby boom in 9 months time !
Feic it I hate being in Dublin. Back home the local FF-voting farmer is probably cutting up all the fallen trees on the road instead of me.
Well feck off then, Dublin would be better off without you
On the subject of falling trees could not help but notice most of the men using chainsaws except The professional guys which were few did not have any H/S gear on which is a must when operating a chainsaw .
I wouldnt chance that myself but each to their own. Up in Dublin you probably need a 4 year degree before you’re allowed near a chainsaw
Alan whist, you’re in Ireland now sonny
No you don’t but what you do need is some good gear such as a helmet gloves trousers anyone ever seen what a chainsaw do to you if something goes wrong and all red thumbs for me so I’m not surprised of the accidents happen with chainsaws.
No power in Ballon Co. Carlow. Its been off since 2.00 pm yesterday. Loads of snow, well an inch and a half. Part of my roof is now somewhere in Wicklow, but nobody seriously hurt around the country. It says a lot that people did in the main use common sense yesterday.
The warnings from Met Eireann were not up to scratch, I knew only from looking at the weather forum on boards.ie that it was going to be a bad one.
Now for a day in front of the fire. Tis all good.
Keep an eye out for a shed roof, trampoline, greenhouse and a few fence pannels, they should be near Ballon now. No snow or electricity in Ballycarney. Time to cut up some fire wood, enough trees down.
You know what they say: “Make hay while the sun shines.” I think it applies here.
Floods are a great time to wash the car. Plenty of water around to rinse her off.
Limerick’s city & county council staff, firemen, gardai & ambulance personnel have done a fantastic job over the last 24 hours keeping roads clear and attending to any injuries in those extreme conditions. Well done to you all.
Show showers? Any tickets left?
Champion, we just ran out of firewood, anybody got a fallen tree just ring leftwingsteve
Irish people and work ?? in the same sentence. HAHAHAH.
Idiots with internet access.
Not all irish people are in that bracket , I worked for over 21yrs and my husband since he was 16yrs.yes their are people who are that bracket off living on the dole never worked. But don’t tar everyone with being dossiers .
And we will do it all again tomorrow!!
Caption competition for the fireman on his phone:
“Where did I put that chainsaw app… Ooh Flappy Bird!”
This tree is big, that one is far away
“No one’s looking, I’ll quickly snap chat a picture of my mickey to a few the lads.”
Now it’s snowing in Leitrim. Great.
I was checking the weather forecast yesterday nearly every 5 min to see if anything would go near kilkenny. As they gave a red alert for cork and kerry only i was surprised to see kilkenny only got a yellow alert. By the time the storm passed kilkenny the met uplifted it to red. If hurricane winds are expected and if you clearly can see the growing storm on sattelite pictures surely you would think they give the whole country a red alert? Also some local radio urged people to move their cars,who were parked under a tree, during the peak of the storm is not very clever. Thats like saying to look for shelter under a tree during a thunderstorm
How do i get to work ??
You mean how do them muck savages collect their dole
Nasty in Killarney last night just cycled in town trees fallen at Port Road by Cathedral be careful.
Could Polymer crystals be used as part of water barriers but also to store water for future use? One pound of the crystals holds about 50 gallons of water.
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