Greens seek rise in capital gains tax, but support corporate rate

The Green Party's economic and taxation policy has committed the party to maintaining corporation tax at its current rate of …

The Green Party's economic and taxation policy has committed the party to maintaining corporation tax at its current rate of 12.5 per cent.

The document, published yesterday, also commits the party to opposing any attempt to harmonise the tax across the EU. However, it has proposed increasing capital gains tax by five percentage points to 25 per cent.

"Our rationale for increasing this rate is grounded in the principle of tax equity rather than revenue increases," the document states. "It is our belief that taxes on capital should be in line with tax rates on personal income."

Commercial rates would also be abolished under the proposals, to be replaced by a site value tax, based on the specific price of land rather than the building on it. It is also proposing a 5 per cent "windfall gain" tax on land that is rezoned or increases in price because of public infrastructure investment.

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This money would be ringfenced for local authorities.

The party also proposes the introduction of a carbon levy on oil coal and gas imports of €20 a tonne.

However, the revenue generated by the tax would be used to reduce VAT and PRSI taxes, while funding increased fuel allowances for low-income households.

Under the proposals, PRSI would be reduced for both workers and employers by 0.5 per cent each, while VAT rates would decline by one percentage point over the lifetime of the government.

There are no proposals to reduce income tax rates, but the party has proposed index-linking the standard tax rate. A refundable tax credit system would also be available for low-income earners.

The document also commits the party to increasing the home carers allowance by €1,000.

The Greens' policy is also advocating the reintroduction of a bank levy on deposit funds, capped at €200 million over a five-year period.

It is also proposing a reform of tax allowances currently available for companies and private individuals, and will phase out property-based breaks such as those for nursing homes and private hospitals.

"The Green Party believes restructuring many of the existing tax reliefs will increase exchequer revenues, improve tax buoyancy and introduce a greater degree of equity into the system."

Unlike Fine Gael, Labour and the Progressive Democrats, the party has not proposed any major reform of stamp duty for first-time buyers. Instead, it will give an exemption to families trading down to smaller homes, which it says will free up properties for younger families close to schools and facilities. These families would also be entitled to stamp relief. The policy also provides for a review of the use of public-private partnerships for infrastructure projects.

However, the party says that it is recognises "the need to meet the completion of projects currently in progress".

Finally, the document calls for "a fundamental and urgent reform" of VRT and motor tax. "We will replace VRT with an environmental charge calculated on fuel efficiency, engine size and vehicle weight. We will replace motor tax with an environmental levy on fuel," the policy paper states.

Green Party economic and taxation policy Policy: main points

A cut of 1 per cent in the top rate of VAT to 20 per cent and the lower rate to 12.5 per cent.

A reduction of 0.5 per cent in PRSI for employees and employers.

The indexation of income tax bands and credits.

An increase of 5 per cent in capital gains tax to 25 per cent.

The introduction of a carbon levy on oil, gas and coal.

A new SSIA type pension savings plan.

A windfall tax on development land.