I’d like to thank the Minister for bringing forward a comprehensive and wide-ranging bill.
It addresses a huge number of issues, and has at its heart efforts to make Ireland more competitive and also fairer. More could be done on this, but significant strides have been made including lifting over 300,000 people out of the tax net by increasing the exemption threshold for the Universal Social Charge.
The increase in wealth taxes on capital gains and capital acquisitions, along with cap of €3 million on reliefs for family business and farms will ensure wealth pays its way, this was a measure not announced at the Budget. Further the rate of DIRT is now at 30%, and the domicile levy has been made tighter.
Further, efforts to clamp down on fraud are welcome – people must have confidence in the Revenue – that all are paying their fair share and that we do not return to what happened in the 80s with tax evasion.
Measures on fuel laundering are also long overdue.
There are a series of amendments I would like to see introduced to bring about a fairer, more progressive Bill
1 . As recommended in the Commission on Taxation Report 2009, there should be an annual tax expenditure report published within several months of the Finance Bill outlining the cost, effectiveness and economic impact of various tax reliefs and measures.
2. I did have issues with the increase in mortgage interest relief to 30% because it is not targeted at those who need it most, but I would ask the Minister if he would introduce an income cap on eligibility. A cap on relief for salaries of a married couple over €200,000 may be appropriate.
3. On the section to regulate the motor fuel business, I would ask the Minister to consider an amendment to ensure that one of the conditions of a license is that the correct planning permission is in place.
4. There has been a lot of heat and noise about SARP – the Special Assignee Relief Program. A lot of this has been due to mis-information. Currently it is tightly worded and ensures that people on high incomes currently working in Ireland cannot avail of it.
It is only available until 2014, the person must have worked for company for 1 year, and not have paid tax in Ireland in last 5 years. If this attracts highly paid jobs to Ireland, my understanding of it is that we will actually gain taxpayers – the Revenue will get taxes and PRSI that were being paid in another country. This is the issue I have – it opens up another front in the tax wars.
Our corporate tax rate is an issue in Europe with many of our competitor countries – this measure is a new weapon, on the personal income tax side and has the potential to undermine our progressive tax system. The Dutch have used a similar scheme to SARP, as have the Canadians.
However, I am willing to support it for a limited period because we must be open to new ideas and ways of doing things, I am glad it is only open until 2014 and I look forward to a review of it on an annual basis to see if it is doing what we want it to.
I would however ask the Minister to consider an amendment to ensure it cannot be used by any employee of Irish banks covered by the State guarantee.
Finally I welcome the proposals to introduce a 5% USC levy on the use of property based tax relief incentives and a further restriction on property based capital allowance. This is something I have pursued since election. PAYE workers who bear the brunt of funding our tax system must see that all income is taxed and no longer sheltered.
I understand that the Minister is to delete the sections introduced last year that were not commenced but I would ask him to keep an open mind, and to review this year’s measures and if they do not work well enough that he consider re-introducing the measures brought in by the late Brian Lenihan.
Copyright Kevin Humphreys 2013