Mr. Brian Brennan:

In chapter 8, we welcome the conclusion by the commission that tax relief on pension contributions should be given at an individual’s marginal income tax rate because these contributions are essentially a deferral of income. The commission also acknowledges there are concerns about anomalies which could lead to inequitable treatment between unfunded pensions, including public sector pensions and the broader private pension landscape. We welcome the recommendation that such anomalies should be eliminated as far as possible.

Moving on to chapter 14, which deals with land and property, as the commission points out, the family home is the main source of wealth for the majority of households in Ireland. The institute regards the local property tax, LPT, as a key stabilising component of our tax system, and we were pleased that changes introduced last year rescued the tax from atrophy. We agree with the commission that the tax base, rates, exemptions and deferrals should be kept under constant review to ensure that they are up to date and reflect current circumstances. If the LPT rate were to increase significantly, we believe it would be appropriate to allow outstanding mortgage debt to be offset when calculating the value of a residential premises, so that LPT would be a tax on the equity held in a home and would avoid those in negative equity being liable for the tax. On the question of a site value tax, we believe that there is merit in considering it as a replacement for the existing commercial rates system. Care would need to be taken in designing such a measure to ensure that less profitable activities, which are valued by communities, would not become uneconomic as a result of the operation of the site value tax. Finally, the commission has provided an array of options for the Government to consider as it seeks to address future challenges. Ultimately, decisions on tax are a matter for the Government, but all tax policy changes have consequences - many of them unintended. Successful implementation is greatly assisted by consultation with key stakeholders, and we welcome this committee’s consideration of the report as part of this process.