Taxation should be a priority in Programme for Government negotiations

Taxation, and how we are going to collect the revenue we need to fund services and infrastructure our population needs now, and into the future, should be top of the agenda in programme for government negotiations.  As the 34^th Dáil convenes for the first time, it is important that politicians acknowledge the fact that we are going to need more revenue, not less, to fund the childcare needs, the education needs, the pension and social welfare needs, the healthcare, home care and home help, housing adaptation, disability and community care needs of a growing and ageing population.  

Level of taxation required on an on-going basis

The next Government must have a clear vision for what types of services and infrastructure it is going to fund, what level of taxation is required on an ongoing basis and how this revenue might be generated.  Planning to meet future demand must start now.  In the context of our growing population, investment in infrastructure and services ought to be linked to real need based on population growth and pent-up demand.  The next Government must be clear about the deficits in our services and infrastructure that need to be addressed and resourced immediately, and how these are to be funded. It also needs a clear picture of what will be required in the future, and how this will be funded on an annual basis.  One thing is absolutely clear, the proportion of revenue that we collect will have to increase in years to come, and our tax-take will have to increase.  This is a reality that Irish society and the political system need to begin to take seriously.

Programme for Government priorities

The Programme for Government should prioritise the setting of a new tax take target on a per capita basis, and a plan over time as to how stable, recurring revenue will be raised on an annual basis.  It should also produce an annual resourcing statement to the Oireachtas outlining how much resourcing is required to maintain existing levels of service, and how much resourcing is required to deliver additional services and meet changing demographic needs, and how this might be raised,  This statement should also set out provisions for the gradual withdrawal of windfall revenues, and the projected costs associated with servicing the national debt.

Publish an Annual Resourcing Statement

• An annual statement to the Oireachtas outlining how much resourcing is required to maintain existing levels of service, how much resourcing is required to deliver additional services and meet changing demographic needs, and how this might be raised should become an integral part of the annual budgetary process.

Proposal: Set a new tax-take target

• Over the next five years, policy should focus on increasing Ireland’s tax-take. A new tax take target on a per capita basis is required. 
• Social Justice Ireland proposes that Ireland’s overall level of taxation should reach a level equivalent to €15,000 per capita in 2017 terms. This target should increase each year in line with growth in nominal GNI*.
• This is equivalent to approximately €25,500 per capita in 2024 terms – meaning that an additional €26 billion per annum in stable, recurring tax revenue needs to be raised excluding windfall gains. 
• Gradually increasing the overall taxation revenue to meet this new target would represent a small overall increase in per capita taxation levels and one that is unlikely to have any significant negative impact on the economy. It would also require a number of changes to the tax base and the current structure of the Irish taxation system.

Proposal: Provide an Annual Review of Tax Expenditures

• Commit to an annual review of Tax Expenditures to be presented to the Oireachtas as part of the Budgetary process. 
• Sunset clauses, the impact of each tax expenditure, their cost to the State in terms of revenue foregone, their economic, social and environmental impact and the length of time that they have been in place should all form part of this report. 
• Consideration of any additional tax expenditures should also be presented to the Oireachtas for debate and discussion in advance of any decision being made.

Proposal: Introduce a Minimum Effective Corporate Tax Rate of 10 per cent

• Social Justice Ireland welcome international developments over the past few years to achieve a minimum effective rate of 15 per cent for large firms, and Ireland’s adoption of this rate from 2024.
• In the medium term a minimum effective rate of corporate tax should be extended to all firms over the next few years to ensure everybody pays their fair share. A minimum effective rate of 10 per cent would simultaneously maintain Ireland’s low corporate tax position and provide additional revenues to the exchequer.
• This change could be phased it in over five years. We propose that the effective rate be adjusted to a minimum of 6 per cent in the first year of the new government.

 ‘A Better and Fairer Ireland – proposals for a Programme for Government’ is available here.