The National Competitiveness Council (NCC) has recommended replacing the current system of commercial rates and vacant site levies with a site value tax.
The council said the site value tax would be a tax on commercial property and land which is zoned and serviced for development.
Made up of executives including LinkedIn EMEA vice-president John Herlihy, Glen Dimplex chief executive SeanO’Driscoll, PayPal EMEA vice-president Louise Phelan, IDA chief executive Martin Shanahan, Glanbia managing director Siobhan Talbot, Ibec chief executive Danny McCoy and Abbey Tours joint managing director Jane Magnier, the council advises the Taoiseach on competitiveness issues facing the Irish economy.
The proposed site value tax was one of a series of recommendations in its latest report on the competitiveness challenges facing Ireland.
The council said taxing land and property is one of the most efficient and least distorting ways for governments to raise funds and to encourage economic and social development.
However, the council believes a single, broad and national approach should be taken with respect to the taxation of commercial property and land which is zoned and serviced for development.
The council also noted that people in employment and the self-employed are treated differently in relation to both the universal social charge and PAYE – with the self-employed facing significant disadvantages vis-à-vis their employed counterparts.
The council said now may be an opportune time to reconsider the entire structure of personal taxation in Ireland, and to develop a roadmap towards implementing a more simplified system of taxes and charges, incorporating income tax, PRSI and the USC that better supports employment and job creation.
The council also believes that it is time to significantly increase the capital expenditure budget, beyond the increases flagged in the Infrastructure and Capital Investment 2016-2021 plan.
“Given the lead time it takes to deliver capital projects, the capital budget should be increased as a matter of urgency,” it said.
NCC chairman Prof Peter Clinch said the council is concerned that, as growth gathers pace, the sustainability of Ireland's recovery will come under threat as competitiveness pressures are returning.
“There is no room for complacency. Maintaining our strong international competitiveness requires constant improvement across a broad range of policy spheres,” he said.
He said any loss of competitiveness will have a major negative impact upon both our economic prosperity, employment and our standard of living.
“While growth prospects for the Irish economy are strong, we must continue to deliver aggressively the structural reforms required to support this growth, and improve competitiveness and productivity.”