Oireachtas Joint and Select Committees

Wednesday, 3 November 2021

Committee on Budgetary Oversight

Remit, Terms of Reference and Priorities: Commission on Taxation and Welfare

Professor Niamh Moloney:

I thank the Deputy. I am very conscious that all the Deputies have a very busy evening so I very much appreciate them being with us. I thank them for that. The Deputy has asked a very important and interesting question. Over the past ten years or so, there has been a real concern, globally, not just in Ireland, to address the enormous generational challenge of climate change. We see it this week with COP26 but there has also been a long slow burn in that our tax system has been adjusting to reflect this and to better nudge our behaviour. Sustainability issues then arise regarding the revenue streams coming through from certain forms of tax base. This is called out specifically in our terms of reference. We are very glad to have that because this is a key issue. It feeds back into our overall terms of reference, which are ultimately there to make sure the State has sufficient revenue to provide the public services and supports that are fundamental to us as a nation.

On some of the numbers, if the rate of electric car uptake, for example, continues as one hopes, we are looking at a revenue hole in the region of €1.5 billion by 2030. On the one hand, the incentives are doing a very good job but, on the other hand, they are opening up a sustainability issue. We are very conscious of that in our terms of reference. It is too early in our deliberations to say how we might specifically address this, but we have a sense that it is important, ultimately, that public services in this country are funded not just for now but in the context of all the challenges we will face into the future. We have a sustainability issue as regards certain taxation bases. Looking into the future, we see the ageing demographic, which is one of the very big issues. If we operate using our current services in terms of health, pensions and so on, something like €17 billion extra will be needed by 2050. We are acutely conscious of the sustainability question that arises on revenue. Our job is to stand back, look at the system as a whole, check it is all working in the best possible way and as effectively as it should be, but to do this with a medium or long-term lens to see what best specific recommendations we can make in this regard.

I thank the Deputy for raising this issue because it is one that is particular to where we are at this moment in time, having had this period during which we have been adjusting to a new way of using taxes. It is now very important, as taxes become more effective, to consider how they loop and feed back into the wider sustainability question.