The Government could raise an additional €15 billion in tax revenue, equating to 5 per cent of national income, over the longer term by adopting the recommendations of the Commission on Taxation and Welfare, the Irish Fiscal Advisory Council (Ifac) has said.
In a technical paper published on Wednesday, the budgetary watchdog examined the main measures outlined in the commission’s report.
The report, which was published in September, detailed 116 possible changes to the tax and welfare systems to broaden the State’s tax base. At the time, Tánaiste Leo Varadkar criticised the proposals, saying some of the recommendations looked they came “straight out of the Sinn Féin manifesto”.
“Broadly speaking, the commission’s report sets out a strategy to raise the level of Government revenue. This recognises the expected rise in age-related expenditure and the vulnerabilities associated with corporation tax receipts,” Ifac said.
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It noted that the report had a “big emphasis” on property and land.
It recommended increasing the Local Property Tax (LPT), introducing a site value tax while restricting the relief from capital gains tax from the sale of a principal private property.
Ifac said the approach in relation to LPT would lead to an additional 1.1 per cent of national income (GNI*) raised on people’s homes.
The commission also proposes that the commercial rates system be superseded by a site value tax, albeit with a greater yield for the exchequer.
The site value tax proposal is very broad, Ifac said, applying to all land currently not subject to LPT and notes that “Ireland already has a high yield relative to EU norms for taxes raised on non-household properties”.
It said it interpreted the commission’s recommendation would increase the yield from the current rates system to 1.4 per cent of national income (GNI*).
“This would broadly align it with the upper end of property tax yields (excluding households) for the OECD and with the yield raised in the UK,” it said.
Speaking on RTÉ's Morning Ireland, Ifac chairman Sebastian Barnes said: “We are going to have to have a discussion about how to raise taxes, overall.”
“What we’ve done is we’ve taken the proposals from the Commission, which touch on a number of different areas and we’ve tried to put a number on that.”
“We reckon that if you put together all of those measures, you get to an increase in taxation around 5.5 per cent of national income,” he said.
