Dáil debates

Thursday, 22 September 2022

Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Tax Code

10:30 am

Photo of Gerald NashGerald Nash (Louth, Labour)
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94. To ask the Minister for Finance his views on the recommendations in the recent report by the Commission on Taxation and Welfare that wealth and capital taxes should increase materially as a proportion of tax revenues; his plans to broaden the tax base and generate additional Exchequer revenue from additional taxes on wealth and assets in order to sustain public spending and to meet the challenges of the future; and if he will make a statement on the matter. [46486/22]

Photo of Gerald NashGerald Nash (Louth, Labour)
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I am sure the Minister will join with me in thanking the members of the Commission on Taxation and Welfare for the sterling work they have done over the last 18 months. The challenges the tax base faces are very obvious. It is also strikingly obvious that we need to change who we tax, how we tax them and by how much. Does the Minister agree with the commission's central contention that we need to generate more tax revenue from wealth and assets? If so, does he intend to take any additional steps in this regard over the next period of time?

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Commission on Taxation and Welfare was an independent group that was established in April 2021 as a result of a commitment in the programme for Government.

It was asked to consider independently how best the taxation and welfare systems can support economic activity and promote increased employment and prosperity, while ensuring there are sufficient resources available to meet the costs of public services and supports in the medium to longer term. Its report was published on 14 September and I have thanked the commission for its work and will do so again.

The report is wide-ranging and contains more than 500 pages and 116 recommendations relating to the future of our taxation and welfare systems. It poses serious questions that we as a society must carefully consider. The recommendations will foster real debate around how we reform our tax and welfare systems over the longer term in order to safeguard their sustainability and adapt to a rapidly changing environment. This important work is focused on the longer term and will contribute to debates on the optimal balance of taxation for many years to come.

It is clearly set out in the commission's report that its recommendations are not intended to be implemented all at once. Rather, they suggest a direction of travel. As the report also acknowledges, the recommendations come at a difficult time economically. The commission's 116 recommendations, including those concerning wealth and capital taxes, are significant and wide ranging, and it is important to allow time for their detailed consideration. While the report, in chapter 7, explores the nature and distribution of wealth in Ireland, it states on page 129 that "a new tax on net wealth should not be introduced without first attempting to substantially amend Ireland's existing taxes on capital and wealth". The seven recommendations it makes in that chapter are, therefore, confined to existing taxes. In advance of the budget next week, it would not be appropriate for me to speculate on which specific elements of the report I might act on.

10:40 am

Photo of Gerald NashGerald Nash (Louth, Labour)
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I am glad the Minister thanked the members of the commission for their work. Unfortunately, that stands in marked contrast to the way in which the Tánaiste trashed their work. The Minister has expressed gratitude to the commission in a very sincere way. That is one thing but the best way he could show gratitude for its work is to implement some of its clear recommendations. There appears to be a marked reluctance to do so, however, with no indication at all of what the Government's plans might be in terms of additional taxes and revenue generation from wealth, capital and assets. The central proposition of the report was set out in its statement that "the balance of taxation must shift away from taxes on labour and towards taxes on capital, wealth, and consumption." I think that is one thing on which the Minister and I certainly will agree. This issue is very urgent indeed. Raising additional revenues sustainably from taxes on assets and capital is a much more sustainable way of resourcing our economy and society.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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We have to balance that against the reality that capital, in particular, is at the heart of how we can sustain economic growth and employment in our country. Capital, for many people, is the savings, assets and pensions they have worked so hard to build up and any changes in that regard must be weighed up against the role that kind of investment and those assets play in creating employment and jobs within our country but also against the reality that we are now in a time in which many are uncertain about the economic circumstances in which their business will be trading in the future and many others are understandably concerned about their living standards. All of these things must be weighed up. The commission, in laying out the recommendations it has made, has afforded the Government time to weigh up those issues, which we will do.

Photo of Gerald NashGerald Nash (Louth, Labour)
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The Minister has spoken very eloquently recently about how vulnerable our tax base is, especially in respect of some of the windfall gains we have obtained from a very small number of very successful companies that, thankfully, have decided to locate in this country and provide very good employment. On the one hand, Government members speak very eloquently and urgently about that issue but they seem to be in no hurry whatsoever to address some of the fundamentals of this problem. Irish people have legitimate expectations regarding the resourcing of our public services, which are really stretched. We know the challenges, for example, in terms of the Social Insurance Fund, which is the responsibility of the Minister for Social Protection, Deputy Humphreys. What I am hearing is the sound of some very large cans being kicked down the road. This is very urgent indeed and much more urgent than many Members of this House understand and appreciate. I accept that we need to tread carefully in regard to some elements of the report of the Commission on Tax and Welfare but this needs proper interrogation. We need a full debate in the House on the report and I hope we can have it after the budget.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I am sure that is a matter the House can consider but I respectfully differ with the Deputy in terms of his acknowledging the commentary and analysis my Department and I have had on corporate tax revenue but then making a suggestion or inference that we have not done anything to manage that risk in recent years. The point I would make is that if we look at where we have been since 2019, even though corporate tax revenue has gone up significantly in that period, the Minister for Public Expenditure and Reform, Deputy Michael McGrath, and I have not altered our core spending plans in that period. It is the main reason, as we face into this budget, that we are in position whereby the increased corporate tax receipts collected have fed into our higher budget surplus rather than being used to fund a change in spending plans during the year. That is a very significant and important development in looking at how we can manage that risk. If I were in a position whereby corporate tax receipts had significantly increased and that increase was used to fund changes in core spending plans, I would be facing very legitimate and significant criticism on such a policy change.