Vol. 466 No. 4
23 Mr. M. McDowell asked the Minister for Finance his views on whether there is scope for a further widening of the Irish tax base; if so, the areas in which this is possible; and if he will make a statement on the matter. [11748/96]
Over the past number of years Ireland has been undergoing a programme of tax changes with a view to increasing competitiveness and growth and thereby contributing to the maintenance and creation of sustainable employment. A key element in these changes, under successive Governments, has been to broaden the tax base and to seek to redress the tendency for earned income to contribute an increasing share of total revenues. A number of allowances, reliefs and exemptions have been abolished, restricted or refocused across several tax heads. These measures have enabled tax rates to be reduced and the proportion of earned income taken in tax to be lessened.
Clearly there is further scope for widening the tax base. This is a matter which receives ongoing consideration each year prior to the budget. The Tax Strategy Group has on a number of occasions examined the issue of base broadening. There have been recent proposals also by Forfás in the VAT and property tax areas. There is also scope for restricting or eliminating reliefs and allowances to make more resources available for tax reduction. The Deputy can be assured that all relevant base broadening options will be examined yet again in the run-up to next year's budget.
I am interested in the fact that the Minister referred to the Forfás report. Expanding the VAT net and having more tax allowances at the standard rate, which the report mentions, are either on the agenda or they are not. I ask the Minister to indicate if they are on the agenda and if the Government is seriously contemplating expanding the VAT net to food or introducing personal allowances only at the 27 per cent rate.
The Fortás report was published only last Thursday. We will have a comprehensive debate on it in this House before we break for the summer recess and that will provide a better opportunity to address the Deputy's questions in detail. All measures designed at improving the overall competitive position of the Irish economy, which include inter alia the lessening of the tax burden on earned income, are being and will continue to be looked at in the Department.
I take it from the Minister's reply that extending VAT to food and having more tax allowances at the standard rate are potentially on the agenda.
The Minister referred to property taxes. The Forfás report mentions levels of services provided and ability to pay. Does that imply a new form of funding for local government? Could the Minister indicate if it is proposed to transfer the burden of tax on work into some form of finance for local government?
Less than a week after its publication it would be wrong and it would do a great disservice to the people who worked hard to produce the Forfás report to respond in precise detail to one of the many measures it suggests we should look at in the context of enhancing our performance over the next 15 years. There will be a debate in this House on the overall thrust of the report and on the various measures it outlines.
As regards the question on local authority taxation, the Deputy knows from a previous answer I gave in this House that my colleague, the Minister for the Environment, has commissioned a study in this regard in line with A Government of Renewal. When that document is available it will be debated in full and we will look at the options in that context. Any other answer at this stage, no matter how much the Deputy might like me to reply, would be premature.
Is it not the case that the study commissioned by the Minister for the Environment to look at the options for funding local government is already available? Did we not read in the newspapers a number of weeks ago that it will be given to Opposition parties to study? Why has nothing happened in the meantime?
That is a matter for the Minister for the Environment. I do not have detailed information with me but, as far as I am aware, that is a matter which has yet to be formally decided by the Government.
Is it the case that the publication of the Forfás report has had no effect on the Government's intentions as regards widening the tax base and that the Government will consider the possibilities before every budget, as it always does, and then make its mind up? Is that the bottom line?
That is not the bottom line and the Deputy is being disingenous. We are talking about a huge document which covers the economy's performance over the next 15 years and which is not yet seven days' old. For the Deputy to suggest that replies to questions which were put down prior to its publication or soon afterwards should take into detailed account possible options in a document which covers an extraordinarily wide range of issues over the next 15 years is nonsense and the Deputy knows that.
