Trade unions and industry groups have reacted with concern to recommendations to increase taxes and change the tax system proposed by the independent Commission on Taxation.
The expert group suggested a range of tax increases in a new report, entitled Foundations for the Future, published today after being asked last year by the Government to look at how the tax system might be widened long term to fund future public services for an ageing population.
The Irish Congress of Trade Unions said that it was “gravely concerned” that the commission had recommended a range of tax supports for high-income earners and businesses be retained.
“We are also concerned with the inadequacy of employers’ contributions to the social insurance fund,” said Patricia King, Ictu’s general secretary.
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Overall, the trade union said the commission had identified “a range of revenue-generating measures targeting wealth, capital income, self-employed income and unfair tax breaks”.
“Capital income and wealth have for too long been grossly undertaxed compared to the income hard-earned by workers,” said Ms King.
She said that it was important that “those with the broadest shoulders bear the brunt” of the cost of an ageing population funding housing, childcare, education, healthcare and transport.
“There can be no going back to the low tax and low spend model that has caused so much of our current problems,” she said.
Small business group Isme said that its “greatest concern” about the commission’s report was that “its only or overriding brief is the acquisition of further revenue”, while the exchequer appears “incapable of securing efficient and effective expenditure of State revenues”.
The group welcomed the proposals to replace commercial rates with a site value tax and to end the 3 per cent surcharge on the universal social charge for the high-earning self-employed.
But it says the proposal to levy PRSI on share-based remuneration “makes little sense when that form of remuneration is so little used in Ireland but should be increased”.
The group said the commission’s proposals on VAT “ignore the fact” that the standard rate is already very high by international standards and a reason why Ireland is among the countries with the most expensive consumer prices in the European Union.
The Irish Farmers’ Association said the recommendations in the report “disproportionately target farmers” and were “very damaging and urban-centric proposals”.
“Increasing taxes on agri-diesel, reducing inheritance tax reliefs or increasing PRSI payments for farmers would be a further targeting of the agri sector,” said Irish Farmers’ Association president Tim Cullinan.
“It would also be counterproductive economically as it will slow down both land transfer and on-farm investment. We are also very concerned at the possibility of including agricultural land in any site valuation taxation.”
Business group Chambers Ireland had a more philosophical response to the report, urging people to evaluate the proposals “in the round” and to avoid “reverse cherry picking – the active seeking of measures to be unhappy about”.
Ian Talbot, chief executive of Chambers Ireland, said the proposals would “mean a fundamental transformation of our taxation system” that would address future challenges, including the greying population, climate change efforts and financing the decarbonisation of society, while ensuring Ireland remains “a growth friendly place to grow a business”.
Tom Woods, head of tax at accountancy firm KPMG, said the Government was unlikely to implement the tax recommendations in the short term as it was “channelling all its efforts on policies to deal with spiraling inflation and the cost of living crisis”.
“The Government should carefully assess the burden of each recommendation, including the broader economic impact on Ireland’s competitiveness,” said Mr Woods.
