The Commission on Taxation report will “frustrate many taxpayers, already reeling under the impact of extra tax levies and charges,” according to the Labour party’s spokeswoman on finance Joan Burton.
In what she termed a preliminary response to a “a comprehensive, complex and detailed document,” Ms Burton said the issue of tax exiles had not been sufficiently tackled and that the commission seemed “excessively restrained” by the dominance of professional tax advisers.
“Contrast this with the Obama administration actively discussing ways of limiting off-shore and non-resident activities that have been heavily implicated in the worldwide economic crash,” she said.
“When the Labour Party called for the creation of such a commission over five years ago, it was hoped that it would address the most glaring anomalies in the tax system - the phenomenon of very high earners paying little or no tax because of a plethora of tax breaks for property investment and mega-pension pots and tax exiles who to all extents and purposes were resident in Ireland.
"However, the terms of reference set by the then minister for finance Brian Cowen emphasised the creation of new taxes such as taxes on carbon, property, water and the examination of areas of such as child benefit,” she added.
Ms Burton said it was "surprising" that the commission did not give any consideration to the property-based tax incentive schemes. She also criticised the failure to examine the high rate of VAT, saying it was a "serious problem."
She said the child benefit proposals were highly complex and bureaucratic for little gain to the Exchequer, saying the commission had failed to recognise that the payment went "directly to the mother and was primarily spent on the needs of children."
The avoidance of any real disccusion on a third income tax rate which would allow for salaries in excess of €100,000 to be taxed at a higher rate of 48 per cent was "surprising" as it would provide for much greater progressivity in the income tax system, according to Ms Burton.
Fine Gael finance spokesperson Richard Bruton said the last thing families and taxpayers needed at this time of deepening economic crisis “was dreaming up even more ways to tax them to pay for an unreformed, often dysfunctional and high-cost public service.”
“No country has ever taxed its way back to recovery, but that is exactly what Fianna Fáil is trying to do. Between the measures already announced by the Government, and those promised for the years ahead, the ratio of tax increases to day-to-day spending cuts is 2:1 - €10.6 billion in tax increases to €5.3 billion in current spending cuts," he said.
“This is unfair and unwise, and will only make the recession deeper and longer. Already, in the last year the Government has announced 20 new taxes or tax hikes, costing a middle-income family over €5,000 per year."
Mr Burton acknolwedged that the Irish tax system needed to be redesigned to support employment and investment, but said the Government’s focus should not be on increasing overall tax levels.
"The focus needs to be on public sector reform. But the Government’s paralysis on public sector reform suggests they will take the easy options again in December," he said.
"Irish people know there will be pain in the years ahead because of the reckless management of the economy. But we will only accept harsh measures that are fair and equitable."
“As we approach the most crucial Budget in a generation, the continuing silence from Government on public sector reform is deeply alarming, and the paralysis in this area is likely to see the Government once again hitting the softest targets – children, the elderly and the most needy – and inflicting the most pain,” he added.
Green party finance spokesperson Dan Boyle said there were a number of areas where his party’s ideas differed from those of the Commission.
However he said he was hopeful the report would “kick-start a debate in the wider public arena about how we can create a taxation system that is fair, efficient and helps to protect the environment and our natural resources.”
"In particular we welcome the extensive review of current tax reliefs. In our submission to the Commission we argued for a system whereby all future tax reliefs are evaluated on cost-benefit basis prior to their introduction and are subject to constant re-evaluation. Tax reliefs must be evaluated for their economic, social and environmental effects."
He also welcomed the recommendation that arrangements governing tax residency should be tightened.
However he said proposals relating to property tax and water charges would be “hotly debated.”
"The Green Party has advocated over many years the introduction of a site value tax and believes that this would be the most fair and progressive form of property tax and would provide a more stable stream of revenue than the current stamp duty regime. This is a point of disagreement between the Green Party and the report."
Sinn Féin Finance spokesman Arthur Morgan said the report was deeply flawed.
"Instead of making the tax system fairer, the majority of the recommendations would further squeeze ordinary householders," he said.
“The recommendations for water charges, property and carbon taxes and the taxation of child benefit will all hit low to middle income earners disproportionately."