No tax cuts in budget, charity pleads
Changes to the tax system could bring in almost €3bn extra for spending on housing, health, and welfare services next year, according to Social Justice Ireland (SJI).
The think-tank has recommended 25 separate taxation measures — a mix of reforms and straightforward increases — which it said would go much of the way towards a €6.50 rise in weekly social welfare payments, more than €1.2bn extra for social housing, more than €1bn extra for health and disability and additional funds for other key services.
In its pre-budget submission, SJI pleaded with the Government not to go down the road of tax cuts that would make little difference to the individual at the expense of vital services.
“We are overrun with crises and infrastructural deficits in this country,” said Colette Bennett, research and policy officer.
“Small tax cuts of €2 or €3 per week aren’t much use to people paying record-level rents, facing long hospital waiting lists, or paying the highest childcare costs in Europe.”
Among the changes SJI seeks are an effective corporation tax rate of 6%. While, in theory, corporation tax is 12.5%, many large firms are availing of schemes that enable them to reduce their tax liabilities to between zero and 5%. Social Justice Ireland says making them pay up would bring in an additional €1bn.
A lot of talk about possible cuts to income tax in #budget2019. Our briefing - available here https://t.co/T8C3Oc4F2w - analyses some of the different options available to the government, and examines the potential distributive effects
— Social Justice Ireland (@SocialJusticeI) September 21, 2018
Restoring the 13.5% Vat rate on the hospital industry would bring in €220m extra, stopping industry claiming refunds for unused tax credits for research and development would claw back €168m and introducing a standard rate of tax relief at 20% would bring in €480m.
“It is inequitable that people on higher incomes should be able to claim certain tax reliefs at the top marginal income tax rate while people with less income are restricted to claim benefit for the same relief at the lower standard rate of 20%,” said SJI.
Also sought is the equalising of excise duty on petrol and diesel to 53 cent per litre by decreasing excise on petrol by 6c and increasing it on diesel by 6c, a measure that would bring in €88m.
Increasing from 2% to 5% the stamp duty on property transfers valued at more than €1m would yield €12m and placing a €200 monthly levy on houses empty for more than six months would, in conjunction with the planned new unused land levy, bring in €78m.
An increased carbon tax, a new levy on plastic packaging and increases in taxes on alcohol, cigarettes and betting are also sought. SJI said the Government should set a new tax-take target calculated on a per-capita basis.
It said that, under Budget 2018, the project tax-take per person was €14,402 while with SJI measures, it would have been €15,000.
SJI director Sean Healy said the improvement in exchequer figures under the recovering economy should be seen as an opportunity to put back into services that had been starved of resources and to help those in poverty.
He said an increase of €6.50 per week in the earned income tax credit, to match the weekly rise in social welfare payments, would help ensure there wasn’t a disincentive to work.
“Ireland now has the resources to ensure that Budget 2019 addresses the key challenges facing Irish people,” said Dr Healy.
“The question is whether Government has the political courage to invest in our social infrastructure and give priority to tackling our housing crisis, reforming the healthcare system and addressing rural and regional challenges.”
