Committee on Budgetary Oversight has published its Report on the Examination of the Commission on Taxation and Welfare Report

Deputy Cowen said “The Commission on Taxation and Welfare was established in April 2021, with the aim of setting out how our taxation and welfare system might best support economic activity and income redistribution whilst promoting employment and prosperity in a resilient, inclusive, and sustainable manner.”

The Deputy said “The Committee broadly agrees with the Commission’s proposals to broaden the tax base in order the secure the sustainability of revenues needed to address future challenges and furthermore agree broadly with the Commission’s proposals to aimed at improving the effectiveness of the welfare system.

Read full Report  

Some of the recommendations contained in the Report are:

1. The Committee broadly agrees with the Commission’s proposals to broaden the tax base in order the secure the sustainability of revenues needed to address future challenges and furthermore agree broadly with the Commission’s proposals to aimed at improving the effectiveness of the welfare system.

2. The Committee recommends that prior to the consideration of increasing rates of VAT thorough modelling, research and analysis be carried out on the distributional impact of such measures, and that appropriate welfare supports be put in place for those most affected by such VAT increases, in particular lower-income households.

3. The Committee recommends that a review of the VAT treatment of goods and services in Ireland be prioritised to ensure they are in line with EU rules.

4. The Committee recommends that the use of temporary reduced VAT rates should be limited.

5. The Committee agrees with the Commission that the Group A Capital Acquisitions Threshold should be lowered to help achieve greater fairness via vertical equity. The Committee recommends that when setting a reduced threshold for CAT, that consideration be given to linking the rate to a multiple of average earnings, to be reviewed and set annually via the Finance Bill.

6. The Committee recommends that as part of the base-broadening measures such as those mentioned in the Commission’s report, that the Department of Finance maximise the utilisation of the Automatic Exchange of Information and the Common Reporting System.

7. The Committee recommends that where proposals to alter the existing capital tax framework are made, thorough analyses are carried out to ensure there are no negative effects on the functioning of the property market.

8. The Committee notes that the report on the Commission on Taxation and Welfare does not address the tax relief disparity that will exist for those currently making pension contributions and those who will be contributing under the new auto-enrolment pension. The Committee recommends that prior to the auto-enrolment scheme coming into effect, that efforts be made to address this inequity. The Committee notes this would be in line with the Commission’s recommendation that anomalies in the tax treatment of different retirement arrangements should be eliminated, as far as possible.

Read more on the work done by the Committee on Budgetary Oversight