Do we need a new Commission on Taxation some 28 years after the last one reported? That body, which took five years to complete its work, published four reports and proposed a radical change in the tax structure.
The commission's work won international acclaim but was received with more qualified enthusiasm at home, where few of its recommendations were implemented. Quite simply, politicians shirked the tax challenge presented as successive governments baulked at serious tax reform. The review group was established in 1980 as thousands of irate PAYE earners took to the streets to demand reform of an inequitable tax system. The commission, which acknowledged the tax system was "unfair, muddled and complicated", had sought to make the tax code simpler and fairer, not least for the PAYE taxpayer.
This time, unlike 1980, there is less public clamour for tax reform. This new tax commission has its origins in the political bargaining that preceded the Government's formation last July. There, the Green Party won agreement to a major tax review, including environment taxes, as part of its price for participation in coalition. The likely introduction of a carbon tax will involve a new tax charge and structure, which the commission must examine as a priority in the 18 months given to complete its work. That, however, leaves little time to consider major tax reform. And, given the narrowly based composition of this new review group, with its limited terms of reference and its need to operate to a tight deadline, proposals for significant tax reform seem unlikely.
If the Government were to establish a commission on banking, then neither the governor of the Bank of Ireland nor the chairman of AIB, might seem obvious candidates to oversee a major review of the banking system. Equally, it is difficult to understand how Frank Daly, who retires next month as chairman of the Revenue Commissioners, makes a logical choice as chairman of the Commission on Taxation. Nor does the composition of the review group, dominated by representatives of the social partners and by financial and business professionals, but failing to include any dedicated advocate for the PAYE taxpayer or consumer, suggest that radical reforms are likely.
Labour's finance spokeswoman, Joan Burton, has expressed her reservations about the composition of the new commission and its terms of reference. She is right to question the failure to include in the commission's remit either a review of the capacity of high earners to minimise their tax liability through avoidance measures, or a reassessment of our very liberal laws on residency status for tax purposes. The non-residency tax status afforded to very wealthy individuals, who spend less than 183 days in Ireland in a tax year, deserves much closer scrutiny and questioning. All told a standing commission on taxation to monitor the operation of the tax system on a permanent basis would be a more effective review mechanism than the Commission on Taxation, as now composed, under its narrow terms of reference.