Common sense reigns at the Commission on Taxation

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

  • Mick Fealty

    Water charges!! With Meters?

    Any chance of the Northern Irish Administration taking a similar form of leadership in the face of similar forces?

  • Mack

    This is the one that got me –

    phasing out tax relief on bin charges and trade union subscriptions.

    Eh? Trade Union membership is tax deductable?

  • *All* State payments should be taxed and all State residents (or their guardians) should make returns. No 2009 return, no 2010-H2 benefits basically. A small withholding tax could ensure that those solely dependent on benefits would not have to make a payment. I’m not sure what the position in Ireland is but there are Revenue clinics in Canada where low income families are assisted in making their returns.

    In the same way, DIRT should be converted to a standard income tax (with PPSNs linked to savings accounts and returned to Revenue) and thus refundable to low-income earners.

    The pension thing looks interesting – doesn’t that means that you could end up being taxed on pension payouts at a higher rate than the relief granted on the original money?

  • barnshee

    Jolly good –tax the entire state to death.. Largest per capita recipient of EC fund for yonks squandered —-the further the arse drops out of it the better now just fuck off and don`t ask for any more.

  • Mack

    Mark –

    Good point, I guess you just either stop paying in or retire once your pension (minus tax free lump sum) reaches the standard rate cut off point. You’d be better off investing your money yourself via ETFs if it wasn’t for the tax breaks.

    Barnshee –

    Ireland is a net contributor to the EU now, I’m not sure how much good subsidising farmers _actually_ did us. And btw, this doesn’t represent taxing the state to death, income taxes will actually be lowered, penal transactional stamp duty will be abolished and replaced with annual property tax that will provide stable returns to the exchequer (rather than seeing tax returns drop off a cliff in a recession). But never let the facts get in the way of a bigotted rant!

  • Mack

    Mark –

    Thinking about, that situation also generally pertains to money paid into pension funds when taxes rise. Probably best not to fund your pension past the standard rate cut off point ever. I’m open to correction on that point though..

  • bk

    Its all necessary,if were are going to maintain the inflated wages and inflexible work practices in the public sector.