Skip to main content
Normal View

Tax Reliefs

Dáil Éireann Debate, Tuesday - 15 June 2021

Tuesday, 15 June 2021

Questions (372)

Gerald Nash

Question:

372. Deputy Ged Nash asked the Minister for Finance his views on the finding from a recent report (details supplied) which states that restricting some of the less well targeted, tax expenditure reliefs and exemptions that apply to taxes such as CGT and CAT could not only contribute to raising significant sums of tax revenue but could also result in a simpler, more efficient tax system; his plans to examine such reliefs in order to put Exchequer funding on a sustainable footing, especially in view of the proposed international changes on corporation taxation; and if he will make a statement on the matter. [31612/21]

View answer

Written answers

I welcome the ESRI report entitled “Options for raising tax revenue in Ireland,” and note their own wording in the report that they “do not seek to advocate any particular tax-raising measure,” but instead seek “to provide evidence for policymakers who are in a position to make these decisions.”

This is the basis on which I and my officials consider such findings, and as such any changes to tax policy are also considered within a wider framework of the fiscal space, impacts on income distribution and other concerns.

With regards to the specifics of Ireland’s Capital Acquisitions Tax (CAT), I would note that the recent OECD paper entitled “Inheritance Taxation in OECD Countries,” acknowledged our CAT regime as the only gift or inheritance tax applied over lifetime transfers, rather than a given time period, in the OECD. The analysis highlights the advantages of the Irish system, in particular with regard to horizontal equity, by ensuring that those who receive the same amount of wealth pay the same amount of tax. In this context, it is also important to consider that Ireland’s CAT is much less generous with exemption thresholds than many other OECD countries, as CAT exemptions apply on a lifetime basis.

In relation to Capital Gains Tax (CGT) and more specifically the reference in the report to the Revised Entrepreneur Relief, I would refer to the external review by Indecon Consultants published as part of the Budget 2020 documentation. A number of possible modifications, amendments and potential improvements were suggested in respect of the relief. These recommendations are under continuous review through the annual Tax Strategy Group (TSG) and Budget process.

Referring to the Principal Private Residence Relief, as the ESRI rightly point out, a removal of this relief could have a significant impact on 'lock-in' effects. Given the current economic impact of the pandemic, it is important to ensure CGT does not act as a barrier to the reallocation of firms and workers.

As with all taxes, a low rate can be funded through a wide base, similarly a narrower base designed to encourage/reward certain behaviour through targeted reliefs requires a higher rate. My Department will continue to examine current reliefs to ensure the sustainability of revenue while balancing the need for targeted incentives and reliefs to address certain market failures through the annual budgetary cycle.

Top
Share