The Indo have leaked some of the recommendations of the Commission on Taxation. At first glance they seem eminently sensible. It looks like income tax rises have been exhausted but other indirect taxes will be introduced. An annual property tax will replace the transaction based and unstable Stamp Duty. Private Sector Pension proposals fall well short of the swinging cuts proposed by the left, instead a new SSIA like scheme will introduced for lower paid workers with the state adding a Euro for every 2 contributed. Tax relief on pension contributions will be a flat 30% for all, benefiting lower paid private sector employees particularly.
According to the report existing swingeing levies should be reduced with the introduction of alternative taxes.
A summary of the changes from the Indo –
- taxing child benefit with a tax credit given to lower-income families to make up for any negative impact . However, the report states that other options should be looked at in relation to child benefit, given the huge logistical difficulties in taxing it.
- introducing water charges, with no tax credit, for every household, with meters eventually installed in all homes. This would raise around 500m a year to to fund local authorities.
- Imposing property taxes on all homes — with the exception of the lower paid and elderly. Initial tax — averaging around 1,000 — to be based on self-assessment but eventually every home would be valued.
- Introducing a new carbon tax on energy use.
- Replacing tax reliefs for the blind and the handicapped with direct payments.
- Scrapping artists’ exemption from paying taxes.
- phasing out tax relief on bin charges and trade union subscriptions.
- Abolishing tax relief for those providing student accommodation in the Gaelteacht.
- New SSIA-type pension for lower paid. State to put 1 for every 2 put up by workers.
- applying a new tax relief rate of 30pc for those already paying into a pension. This would mean that those on the 20pc income tax rate would get more tax relief, while those on the 41pc rate would get less tax relief for pension contributions.
- Introducing a 200,000 cap on the retirement tax-free lump sum.
- Changing the ceiling on PRSI payments. Currently workers pay PRSI up to 75,036 only. PRSI should be paid on all income by workers, according to the report.
Update : Constantin Gurdgiev is sceptical pension plans are affordable, and claims his sources say that Stamp Duty and The Property Tax will co-exist for a time, previous Stamp Duty payments will not lower property tax due
No bio, some books worth reading – The Rational Optimist: How Prosperity Evolves – Matt Ridley .
Crisis Economics: A Crash Course in the Future of Finance -Nouriel Roubini, Stephen Mihm