Chambers calls for more employees to be brought within income tax net

More employees must be brought within the income tax net to ensure that the tax system is equitable, according to the State's largest business organisation.

In an election manifesto published yesterday, Chambers Ireland called on the next government to adjust income tax levels and thresholds so that only one third of the workforce does not pay any income tax.

"Almost 40 per cent of the workforce does not pay any income tax at all," chief executive John Dunne said yesterday. "We believe that this number is too high and does not ensure that enough taxpayers are sensitised to Government spending."

The incoming government must also ensure that one third of the workforce pay the standard rate of tax, while another third pay the top rate of income tax, "whatever that rate may be," Mr Dunne said.

The manifesto stresses that the current 12.5 per cent corporation tax rate must be "rigorously defended". The 20 per cent capital gains tax (CGT) rate should also be retained, in order to prevent wealth becoming "locked into" assets.

Chambers Ireland also suggested that the funding ceiling for the controversial Business Expansion Scheme (BES) be raised to €10 million. Alternative energy projects should be supported by extending BES relief into this sector, it suggests.

Regulation was highlighted as an area with scope for improvement. "The cost of compliance for businesses in this country is 3.5 per cent of GDP," Mr Dunne said. "The World Bank ranks Ireland 80th in terms of favourable employment regulations."

In order to address this, the next government should commit to update regulations on two set dates each year, rather than on an ad-hoc basis.

Chambers Ireland also called for greater clarity in relation to the State's national accounts. In particular greater visibility is required in the area of future pension liabilities, it said.

The possibility of introducing a voluntary redundancy scheme for public servants was also put forward.