Professor Peter Clinch:

On the issue of the narrowing of the tax base, we need to go back to why we needed to broaden it during the crisis. The narrowing of the tax base was identified at the time as being one of the contributory factors towards a lack of sustainability of the public finances and the reason why universal social charge was introduced. Our concern about the commitment to remove the universal social charge is having a sustainable tax base into the future. The difficulty with removing the universal social charge is establishing where the funding will come from. It is a challenge we are putting out. We are saying if the Government is going to narrow the tax base, there are some risks, and we are asking where the alternative funding will come from. It is the question we are asking rather than answering as a competitiveness council. Having a competitive tax system is a crucial aspect of the competitiveness offering of Ireland. At the moment, to give the committee a quick view on our tax base, we are still very competitive on corporate tax but we have increased competition in the corporate tax area, as we know without going into details, including the UK reducing its rate to 15%. On our VAT regime, we are relatively competitive but there is a threat from the UK which is also part of our Brexit response, which Deputy Calleary has asked about. We have very high rates of capital gains tax relative to others. In Ireland in 2014, we had the third highest capital gains tax rate.