Mixed welcome from business groups for proposed changes on taxation

REACTION:REACTION FROM business groups to the Commission on Taxation report was broadly positive yesterday, though multinational business interest raised several concerns.

Employers’ group Ibec welcomed the recommendations of the report, in particular the proposals not to increase the corporate tax rate and to extend the tax credit for RD.

While welcoming “the long-standing need to modernise the Irish tax system”, Ibec chief economist David Croughan said the proposed changes to income tax “must be designed to ensure that they do not act as a disincentive for high-skilled mobile labour from abroad.”

The Small Firms Association (SFA) was also supportive of the report, in particular what director Patricia Callan called its “measures to support business”. Specifically, the SFA welcomed the suggestion that the disposal of assets used for trading purposes should be taxed at the corporate tax rate, rather than the higher capital gains rate which has “posed a barrier for those companies seeking to expand and reinvest in their businesses”.

The association also welcomed the proposal to allow companies to offset their RD tax credit against employer PRSI costs.

The American Chamber of Commerce has welcomed the commission’s endorsement of Ireland’s low-tax policy but expressed concern that, if implemented, several proposals could damage Ireland’s cost competitiveness.

It cited the proposal on carbon tax – which it says must be revenue neutral and incentivise energy efficiency – the abolition of tax exemption on patent royalties and proposals on personal taxation which it says would add to cost pressures and reduce Ireland’s attractiveness to key mobile talent vital to building the knowledge economy.

“We are calling on the Minister to refer any such proposals and recommendations for examination and consideration by the National Competitiveness Council prior to implementation,” said Pat Wall, chairman of the chamber’s tax group.

Chambers Ireland was broadly positive in its reaction to the report, welcoming property and water taxes which it says will “provide a broader sustainable revenue base” for local authorities.

The Dublin Chamber of Commerce was more critical, however. While also welcoming the broadening of the commercial rate base to include State bodies, and the extension of water charges to domestic users, it was sharply critical of the proposed property tax.

The Irish Exporters’ Association said yesterday that the report was “by and large” supportive of the export sector.

It welcomed the proposed removal of the close company surcharge on professional service companies and the introduction of an overall foreign pooling system for royalty payments, which it says will make Ireland more competitive in attracting FDI.

The Irish Stock Exchange welcomed the proposal to abolish stamp duty on all transactions in Irish shares.