Ireland must resist Juncker plan on ending veto on tax

Ireland's must defend the principal of unanimity on tax matters at a European level, PwC tax partner Liam Diamond has said.

Speaking at the Irish Times/PwC Tax Summit, Mr Diamond said politcally motivated moves to harmonise national rules on tax across the bloc had the potential to damage Ireland’s competitive offering and choke off multinational investment.

EU Commission president Jean-Claude Juncker has called for a major change on tax across the bloc, claiming the current practice of unanimous decision had blocked major overhauls of tax legislation.

“In the longer term, Ireland must defend the requirement for unanimity at EU level on tax matters, particularly on politically motivated proposals such as the Common Consolidated Corporate Tax Base (CCCTB) and tax equalisation where our tax sovereignty and national interest is at stake,” Mr Diamond said.

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“Ireland is recognised as having a competitive and sustainable tax offering built on an attractive Rate, Regime and Reputation,” he said, noting that most OECD countries were now moving to a low rate, broad-based model.

“ Both risks and opportunities will arise in the medium term for Ireland which we must anticipate and be ready to defend Ireland’s interest as proposals emerge,” he said.

Also addressing the event was PwC tax partner Doone O’Doherty, who spoke about the economic, technological and demographic challenges to our personal tax system.

“ These include increased automation, which may lead to greater economic disparity; an increase in the ‘gig’ economy, which may impact future ‘fiscal spaces’ and - if we survive all that - longer working lives with implications for individuals, the employer and the State,” she said.

Ms O’Doherty said effective personal tax rates in Ireland are relatively low, particularly at average incomes.

“However, the marginal rate kicks in quite early, applying to income over €33,800. The resulting high personal tax burden is the top threat to business growth as viewed by Irish CEOs today, and is up from 77 per cent last year, according to PwC’s 2017 Irish CEO Pulse survey,” she said.

Reducing the personal tax burden is also a key factor in increasing Ireland’s attractiveness as a location of choice for foreign direct investment for nearly a third (29%) of Ireland’s MNC CEOs, she said.

“In the shot term, particularly in the context of Brexit, the Government may want to enhance incentives for foreign executives to relocate to Ireland - bridging the gap until the top rate of tax is reduced for all,” she said.