The Commission on Taxation and Welfare has done the job we asked – difficult tax decisions to be made

For any country, the tax and benefit systems are among the most powerful tools available to a government. They affect how the economy grows, who benefits from that growth, and the impact it has on the environment.

But they are also a central part of the social contract – what we owe one another. What we put into the common pool and how we cater for our collective and individual needs.

It is therefore important and appropriate that we take a step back from time to time to see how well our tax and benefit systems are working for us now and how well they will meet our needs in the future. This task was given to the Commission on Taxation and Welfare last year.

Our assignment was explicitly strategic in nature. We were asked to consider how tax and benefit systems could best support and promote economic activity, employment and prosperity, while ensuring that public services and supports are adequately resourced in the medium to long term.

Our broad mandate also challenged us to consider how the tax system could support key elements of public policy, including those related to housing, public health and decarbonisation, and in the light of the experience of the Covid-19 pandemic.

While public finances are currently in a reasonably healthy position, major challenges lie ahead

This was a demanding task, but necessarily so. While public finances are currently in a reasonably healthy position, major challenges lie ahead. Irish society is ageing, and fast. In the not too distant future we will have to pay much more to provide pensions, health services and long-term care to more of our elderly.

We are currently overly dependent on corporate tax revenues, which may not be permanent. We face the crucial challenge of climate change: the tax system must play a key role in reducing carbon emissions, but the resulting loss of excise tax revenue must be replaced.

We must further develop our social system to reduce poverty, especially among children. And we must ensure that prosperity is secured and social progress protected.

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Professor Niamh Moloney spoke at the launch of the report of the Commission on Taxation and Welfare at Dublin City University on Wednesday. Photo: Niall Carson/PA Wire

These are just some of the concerns faced by the Commission. The members of the Commission, who come from a wide range of backgrounds and have diverse and extensive experience, have worked extensively to produce the report. foundations for the futurewhich came out this week.

Our report contains a number of recommendations aimed at ensuring the sustainability of our tax and benefit systems and their ability to meet our needs in the medium and long term.

It’s not the Commission’s job to draw up budgets – that’s someone else’s job

It’s not the Commission’s job to draw up budgets – that’s someone else’s job. As we made clear in our report, our recommendations cannot and should not be implemented all at once. Some of the recommendations would take several years to be properly implemented and require careful preparation and management. We are acutely aware of the cost of living crisis that has occurred since the Commission was set up.

However, given our mandate, it has been our role and responsibility to review this immediate crisis and consider what needs to be done in the coming decades to meet our needs and support our prosperity. The Commission hopes that this report will prove to be an enduring document that will help inform this and future governments.

Our report – which can be found at www.gov.ie/cotw – sets out a strategic and principles-based approach to addressing existing and growing challenges. We make 116 recommendations. These recommendations are framed by our belief that tax levels as a share of national income must rise in the coming years. Significant reforms are needed to achieve this at the lowest possible economic and social cost.

Instead of simply increasing tax rates, the tax base should be expanded. Crucially, a larger proportion of revenue must come from taxes on capital and wealth.

We are not proposing a wealth tax as such, but changes to existing taxes on property, land, inheritance and other forms of wealth are required. A number of reforms are required for PRSI to finance the social protection system. To replace fossil fuel tax revenue, we need to plan road pricing schemes and congestion charging should also be introduced.

Gradual reforms are needed in social assistance, including a second tier of child benefits for low-income people and changes in how welfare rates are set. There is scope to improve support for SMEs targeting young, high-risk and R&D-intensive companies and the commercial rate system should be replaced.

A key proposal of the report is the development of a property value tax for properties that are not subject to local property taxes

A key proposal of the report is the development of a property value tax for properties that are not subject to local property taxes. Central to our report is the concern to maintain high levels of employment through careful planning of how tax and benefit systems interact.

These and our other recommendations represent an informed, strategic, and balanced approach to addressing long-term concerns. We are aware that individual recommendations may provoke opposition from individuals and stakeholders: nobody likes to pay taxes.

However, the public interest requires a reflective and responsible debate about the challenges we face as a society and the role of tax and benefit systems to address them in a fair, just and sustainable way.

I am deeply grateful to the members of the Commission for their contribution to this important national conversation.

Professor Niamh Moloney chairs the Commission on Taxation and Welfare

https://www.independent.ie/business/commission-on-taxation-and-welfare-did-the-job-asked-of-us-tough-tax-choices-have-to-be-faced-41995579.html The Commission on Taxation and Welfare has done the job we asked – difficult tax decisions to be made

Fry Electronics Team

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