Cross-party approach needed on tax and fiscal policy
Responding to the publication today of Ireland’s Corporation Tax Roadmap, remarks by the Governor of the Central Bank, as well as a report by the OECD on the convergence of corporation tax rates internationally, Labour Finance Spokesperson Joan Burton argued for a cross-party approach to consider Ireland’s fiscal policy.
Deputy Burton said:
“As other countries lower their rates of corporate profit tax, and as Ireland conforms with OECD processes to standardise aspects of how corporate tax is calculated, it is incumbent on all parties to consider the long-term future of Ireland’s tax system and to plan for a tax base that is less reliant on our Corporation Tax regime as a major driver of foreign direct investment.
“As Labour Finance spokesperson, I have already introduced a Bill in the Dáil to establish a Standing Commission on Taxation. This committee would be tasked with monitoring, reviewing and advising on the reform of tax law on an ongoing basis.
“The establishment of this Commission would ensure that technical experts are constantly reviewing the latest developments to ensure that Ireland is ahead of the curve in responding to international changes in taxation. This is vital work that is needed to safeguard our tax base and prevent unprecedented shocks, such as occurred in 2008 where total tax take dropped by nearly a third.
“I welcome the Central Bank Governor’s studied analysis of Ireland’s macro-financial situation and I would give credence to his view that Ireland needs to have robust tax policies in place. However, I would caution him against making specific tax policy recommendations, such as raising the overall rate of VAT, as this lies outside the competence of the Central Bank.
“Ireland’s rate of VAT, at 23%, is already at the higher end of the scale, especially compared to the UK’s VAT rate of 20% and the need to ensure cross-border competitiveness with Northern Ireland.
“Additionally, VAT is a regressive form of taxation, which takes proportionately more from lower income households, compared to progressive income taxation.
“I have been calling for some time for the implementation of a minimum effective rate of taxation on corporate profits to ensure that companies in Ireland cannot use accounting tricks and tax losses from the property crash to avoid paying their fair share. This is the kind of tax reform that is needed to safeguard Ireland’s tax system into the future.”