Commission on Taxation report:THE REPORT of the Commission on Taxation, due to be published on Monday, will recommend the "wholesale" abolition of tax reliefs used by wealthy people to shelter income, according to a source with knowledge of the report.
“The income tax system will become even more progressive,” the source said. Levies introduced as a result of the crisis in the public finances already mean people with incomes exceeding €100,000 have seen their marginal tax rate increase significantly.
The report will recommend changes to the taxation of pensions that will favour middle- and lower-income earners, but lessen benefits for higher earners. It will recommend the introduction of a special saving incentive account-type pension scheme for the lower paid.
It will also recommend the taxation of child benefit, but will include a strong caveat concerning the difficulties involved in doing so. These difficulties could have the effect of making means-testing a more attractive option.
The report will recommend the introduction of a property tax and the abolition of stamp duty. The tax would be in the order of €1,000 per annum, with exemptions for those on low incomes.
The report will also recommend the introduction of a carbon tax and the imposition of water charges. It will include recommendations for taxation measures that would encourage economic growth and inward investment.
Measures affecting so-called tax exiles are also to feature in the report as is the recommendation that the tax exemption for artists should be abolished.
The commission set out to produce a revenue-neutral series of recommendations for running the tax system over the next 10 years.
Its terms of reference tell it to keep the overall tax burden low and to maintain the corporation tax rate at 12.5 per cent.
It was also charged with considering how the tax system could best support economic activity and promote employment.
The report has a core philosophy of shifting the tax burden away from those taxes that affect economic activity the most, towards those areas that affect economic activity the least.
Those that are considered to most dampen economic activity are said to be corporate tax and income tax, with tax on property being at the other end of the spectrum.
The commission, which was chaired by the former chairman of the Revenue Commissioners, Frank Daly, had 16 members.
All but one of these have signed the final report.
The vice-president of Siptu, Brendan Hayes, did not sign the final report and a statement from him explaining why he did not do so is expected to be published with the report.
Privately, a number of commission members have spoken highly of Mr Hayes’s contribution to the commission’s deliberations over the course of its work.
His statement is expected to praise the commission’s work, but to express reservations about the philosophy behind the Government’s establishment of the commission.
