THE COMMISSION on Taxation report which recommends the introduction of a property tax, a carbon tax and water charges was presented to Minister for Finance Brian Lenihan yesterday.
One of the 17 members of the commission, Brendan Hayes, the vice president of Siptu, declined to sign the final report. It is understood he felt unable to accept one of the key terms of reference of the commission – that the overall tax take should not be increased.
Mr Lenihan intends to brief his cabinet colleagues about the contents of the report next Tuesday and it is expected to be published a week or so after that.
The report, which comes to over 600 pages, recommends that the Government should put transition arrangements in place at an early date to ensure that the its recommendations do not lead to distortions as people await Government decisions on the major recommendations.
It is understood the commission feared its recommendation that stamp duty be reduced significantly with the introduction of a property tax might have a distorting impact on the property market.
This could be avoided by a Government commitment that any reductions in stamp duty would apply retrospectively.
The commission, set up in February of last year and chaired by the chairman of the Revenue Commissioners, was established to examine all aspects of the taxation system. Its brief was to keep the overall tax burden low, including retaining the 12.5 per cent corporation tax. It was also asked to propose measures to further lower carbon emissions on a revenue-neutral basis.
Earlier this year, following contact with Mr Lenihan, the commission agreed to complete its work earlier than its deadline, which was originally set for September 20th.
One of the key recommendations is understood to be the introduction of a property tax which would be in the region of €600 to €800 a year on the average house. The total amount of revenue to be raised from property tax would be in the region of €1 billion a year.
While property tax has been a thorny political issue since the abolition of domestic rates in 1977, the Government is anxious to move away from volatile property-based taxes like stamp duty to a more sustainable tax.
Water charges are also proposed in the report, above a certain level of consumption, although the absence of a system of water meters poses a difficulty. Irish people use considerably more water than other European countries and a water charge has long been recommended as a means of reducing waste.
A carbon levy, which would involve increases in the price of petrol, coal and peat briquettes, will also feature in the report.
However, it is also expected to recommend that new taxes should be offset by reductions in the current income tax take from people on middle and low incomes.
However, the report recommends that any new taxes or charges should be balanced out by a reduction in income levies.
Among the other 250 recommendations in the report are the taxation of child benefit with a tax credit given to lower-income families. The scrapping of the artists’ exemption, the phasing out of various tax reliefs, a new SSIA type pension for the lower paid, the reduction of tax relief on pension contributions and a €200,000 cap on retirement tax-free lump sums also form part of the report.