Gerard Craughwell (Independent) | Oireachtas source

I thank the Minister of State for coming to the House today.

The last report of the Commission on Taxation was published in 2009. Many of its comprehensive range of proposals have been successfully implemented while others, such as water charges, continue to be controversial. One of the stated objectives of the report was to keep the overall tax burden low and to enhance the rewards of work while increasing the fairness of the tax system. It also sought to ensure that our regulatory framework was flexible, proportionate and up to date. One of the key words here is “fairness”. By fairness I mean, the impartial and just treatment of citizens without favouritism or discrimination.

Yet our taxation system continues to remain strategically skewed and inherently unfair. Our personal taxation system is full of anomalies and the legal loopholes and business arrangements which facilitate tax avoidance seem to be infinite. Last year’s report of the Irish Tax Institute reminded us that the nine consecutive budgets between 2009 and 2016 involved over 50 different tax changes that impacted Ireland’s personal tax system. It not only brought about some unintended consequences, it also created anomalies across all salary levels. We all know about what is called the “squeezed middle” and that a self-employed person earning €18,000 will pay €1,820 more in tax than a PAYE worker on the same salary.

I am aware that the Income Tax Reform Plan 2016 sought to address some of these issues but while we have been focusing on personal taxation successive Governments have taken their eye off the tax ball and we now know to our immense cost that the Taxes Consolidation Act 1997 created loopholes which effectively allowed for the loss of taxes to the tune of €2 billion per year. This, added to the European Commission’s judgement that Apple owes the Irish state €13 billion in unpaid taxes, points to a failure by the Government to stop a haemorrhage of taxes from the state, taxes which would have funded much needed infrastructural projects.

There has been a lot of focus on the so called vulture funds and the charities which benefitted from them, but the real question to be addressed by the Commission on Taxation is who was asleep at the wheel, who turned a blind eye to the wholesale strategic and legal avoidance of taxes over the last ten years and how can these loopholes be immediately closed. The report of the Commission on Taxation 2009 was produced through a social partnership approach with serious input from trade unions, business, agriculture, the charity sector, financial advisers and academia among others. The cynics among us might say that the Government can no longer be trusted to be the sole decision maker regarding taxation policy and that it has not acted in the public interest. I therefore believe there is a real need to return to this stakeholder model, a model which encourages public engagement and wide sectoral consultation, would strengthen the work of the Department of Finance, the Department of Public Expenditure and Reform and the Revenue Commissioners and which would bring much needed transparency and reassurance to a now very disheartened public.

The reputational damage to the integrity and fairness of our taxation system by the vulture fund revelations is enormous and has left a very sour taste in the mouths of the thousands of distressed residential mortgage holders on whose backs these immense profits were made. We owe it to them to undertake a comprehensive independent review of our taxation system. It is the very least that we can do.

I thank the Minister of State for his time and attention to this matter today. I hope that he will give my proposal serious consideration.