Money to run State in years ahead must ‘come from somewhere’ - tax commission chair

The exchequer needs to raise significantly more tax to support public services in the years ahead and “it has to come from somewhere”, according to Prof Niamh Moloney, who chaired the Commission on Tax and Welfare.

Proposals in the report published this week were not intended for immediate implementation in the current budgetary cycle but were a guide for the next five to 15 years during which the State would require significant additional funding due to an ageing population, the green transition and other pressures, she said.

Asked about political criticism of some of the proposals, Prof Moloney said the report speaks for itself and she would encourage people to look at the report and consider its work in full. She said she hoped it would be a key contribution to the essential debate to come, which was essential to make the public finances more sustainable.

[ Mark Paul: Tax report has something to suit every political hue, but will ultimately amount to nothing ]

‘Not for now’

The commission was “acutely conscious” of the pressure on people from the cost-of-living crisis and the recommendations were “not for the now, not for this budgetary cycle”, she said.

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Several Government Ministers have criticised aspects of the report, with Taoiseach Micheál Martin saying he did not support proposals to increase inheritance tax, while Tánaiste Leo Varadkar said some of the proposals could be from a Sinn Féin manifesto. Minister for Finance Paschal Donohoe has promised to make an initial response to the document in his budget speech on September 27th.

“No one wants to pay tax and yet the additional tax has to come from somewhere,” Prof Moloney said. The ageing population alone would cost an extra €7 billion to the exchequer in the years ahead and a “national conversation” was needed on how to gradually increases revenues.

Broader tax base

“Inevitably there will be debate and discussion but broadening the tax base is something we have to get to grips with.”

The approach of the commission had been first to accept that more revenue would be needed in the years ahead and then to look at how to raise it in the most efficient fashion. It was essential, she said, to broaden the tax base and to look to raise more revenue from sources other than income. Taxes on land, property and wealth would be more stable and would cause less damage to growth and employment than raising more taxes from income.

The commission had decided not to set a timetable or target revenue levels for tax increases in certain areas, she said, as these were questions for the politicians. It had completed the report and it was now “over to the political system”.

She hoped the report, drawn up by a group of experts and including 116 recommendations, would be an “enduring document” to support governments in the years ahead. The recommendations had been designed to make the public finances more resilient and to strike a balance in how they affected different groups and to be fair, she said. “They do all sit together; they are an interlocking set of recommendations.”