The Irish Times view on the Commission on Taxation and Welfare: an agenda for after the crisis

The report of the commission on tax and welfare is a well thought-out document which lays out recommendations for raising revenue in the years ahead. One of its key assumptions was a simple one – to operate on the basis that more revenue would be needed to fund public services and State investment in the years ahead. As the report says, it needs to be read as a whole, as it tries to strike a balance in what it proposes. Those who pick off its recommendations to criticise need to be asked to specify where they would favour raising the cash.

Debate on the recommendations is both inevitable and essential. Even within the commission itself, two members said they could not support some specific proposals. This debate needs to recognise that the ageing population, the environmental transition and the requirement to improve State services and boost investment means more tax revenue will be required in the years ahead. An extraordinary surge in corporation taxes has allowed this discussion to be delayed. But it needs to happen.

The economic backdrop to the publication of the report will, of course, make its recommendations look strange. The short-term economic agenda is all about how to support households and businesses through the energy crisis. The report is full of recommendations about where they should be asked to pay more.

These are not necessarily contradictions – the crisis will, we hope, pass and more normal economic debate will resume. But it does mean that in the short term the vast bulk of the report’s recommendations will not be acted upon – and as we move towards the next general election the risk is that its proposals are quietly sidelined.

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Politicians of all shades are likely to avoid facing up to the longer-term need to raise new revenues for as long as corporation tax remains strong. But doubling Ireland’s bets on this source of revenue in the years ahead – and on income taxes subject to the same economic cycle – would be increasingly risky.

The underlying approach of the report, as well as raising more revenue from a broader base to underpin the sustainability of the public finances, is informed by the need to avoid putting all the additional pressure on higher income tax. The report recommends a range of tax changes elsewhere, including new revenues in areas like indirect tax, capital taxes, property taxes and social insurance. It also has important welfare proposals, including how to better structure childcare supports and help lower-income working families.

The political problem is that increasing other taxes will not be popular. It never is. But somehow, after this crisis has passed, a way needs to be found to do so in a planned way. Otherwise, sooner or later, Ireland will face another painful period of fiscal adjustment.