Commission on Taxation recommendations

An RTÉ report outlines the recommendations from Ireland’s Commission on Taxation report. [pdf file] Opposition parties, and other interested groups, are reportedly wary. Adds According to Taoiseach Brian Cowen, the report “is setting a framework for reforms over the next decade.”From the RTÉ report

Outline of proposals

An annual property tax on all residential property excluding social and local authority housing

Child benefit should be a taxable income with a tax credit to offset the increase in tax for low income earners

– A new three-rate income tax system should be introduced to replace the current high and low income tax rates

– The health levy should be abolished and integrated into income tax system when fiscal conditions improve

– Rules on residency and tax exemption should be strengthened

– Stamp duty on ATM, credit and debit cards should be phased out in the interest of promoting cash free society

– Removal of tax relief for nursing home expenses once the Fair Deal scheme ends

– The current ‘Cinderella clause’ needs to be supplemented with additional tests and criteria

– Additional capital gains tax should apply on windfall gains from property rezoning

– Domestic water charges should be phased in, with incentives to install meters, with a waiver for low income households

Carbon tax based in tonnes of carbon should be introduced and collected at earliest point of supply

VRT should be replaced over ten years by a system based on car usage

Tax relief for pension payments should be replaced with a scheme ‘along the lines of the former SSIA scheme’

– The first €200,000 of pension lump sums should be tax-free with remainder taxed at standard rate

– Ireland’s low corporate tax rate should remain in place to support economic activity long term

– End to the artists’ tax exemption

– Expenses of Oireachtas members should be treated as the same way as expenses paid to all other employees, with a limit placed on the dual abode allowance and an end to the flat rate of relief for accommodation.

– End stock relief for farming business but continue relief on farm land leasing

– Income tax relief for trade union subscriptions should be ended

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  • Mack

    An annual property tax makes sense, I think we’re alone in the Western world in not having one (and the transaction based stamp duty has led to extreme volatility in tax reciepts).

    Phasing VRT out also makes sense, it was anti-European anyway.

    Pension changes could be a good idea, they look like extra protections for lower paid workers (at the expense of higher paid workers). Should led to a more vibrant ‘grey’ economy in the long term (more pensioners with decent incomes). They’re also family friendly. Because married couples can share tax credits & bands (if both work some hours) these changes would lower the financial impact of a partner (normally women) moving from full-time to part-time employment. The full-time spouse would get the tax-credits and a big pension boost (e.g. going from a 70% relief to a 130% relief).

    The third tax rate is for workers earning over €250k, which is suitably high. If it leads to lower taxes for those earning less it’ll be a good thing. The only danger is that it may get whacked up to ridiculous levels (say 80%) where it may interfere with company expansions and job creation (think execs in multinationals turning down promotions that would lead to expansions in Ireland).. Minimum wage workers to be taken back outside the tax net (after being dragged back in by the income levy. approx – €16,500 p.a. tax free), which is a good thing – esp. with falling prices.

  • The SIPTU guy refused to sign. Social partnership in the bad times? Not a good sign is it? I guess he couldn’t sign off on the removal of tax relief on subs!

    The problem with moving from VRT to use-based taxes is that it double taxes people who already own cars. Even if it was resold there was a VRT component in the sale price. Is there any mechanism to rebate car tax to existing owners? (See also property tax vs stamp duty)

  • aquifer

    All sensible stuff. The opposition will have to feign outrage though.

    I think that taxes on consumption such as VAT and fuel duties do not get the same bad reaction as income tax and rates, and do something to pick up resources from tax dodgers.

    ROI will need them all it seems like.