Gerald Nash (Louth, Labour)
Link to this: Individually | In context

41. To ask the Minister for Finance if he will provide an up-to-date analysis of any measures his Department has introduced that were included in the recommendations from the Commission on Taxation and Welfare since the publication of its report; and if he will make a statement on the matter. [28126/25]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context

‘Foundations for the Future’, the report by the Commission on Taxation and Welfare was published in September 2022. It is a comprehensive document featuring 116 recommendations aimed at shaping the future of Ireland’s taxation and welfare systems.

The Commission was tasked with independently assessing how taxation and welfare policies can best support economic growth, enhance employment, and ensure long-term sustainability of public services.

The report emphasises that its recommendations are not intended for immediate implementation, but rather to provide strategic guidance for future governments on maintaining fair and equitable tax and welfare systems.

In addition to the work being undertaken by my own Department, the Committee on Budgetary Oversight reviewed the Commission's report. The Committee’s report, presented to the Dáil last year, offers valuable insights and supplemental recommendations for consideration alongside the Commission’s report.

Since the publication of ‘Foundations for the Future ’, my Department has undertaken several legislative and policy initiatives. Legislative changes introduced in recent Finance Acts include updates to Capital Gains Tax Retirement Relief and Capital Acquisitions Tax. A new capital gains tax relief has also been introduced to encourage investment in innovative small and medium-sized enterprises (SMEs). Reviews of Ireland’s personal tax regime and share-based remuneration have also taken place.

My Department is also focused on and committed to improving how Tax Expenditures are reported and evaluated. In collaboration with Revenue, my Department has worked to implement the Commission’s recommendations in this area. A formal review of the 2014 Tax Expenditure Guidelines led to the publication of updated guidelines in October 2024, establishing best practices for evaluating and reporting tax expenditures.

In addition to the updating of the Guidelines, officials have undertaken a significant amount of work to improve the Department’s Annual Report on Tax Expenditures. Data availability, enhanced reporting and transparency are key for evaluation. Details of a forthcoming publication, the tax expenditure ‘passport’, are contained in the Guidelines. This new publication will further help improve transparency in the reporting of tax expenditures.

On Corporation Tax, Finance Act 2024 introduced a participation exemption for foreign dividends, simplifying international double tax relief. Further work will explore expanding the geographical scope of this measure.

As announced in Budget 2025, a review of the Research & Development (R&D) tax credit is currently being undertaken as part of the regular schedule of tax expenditure reviews.

In relation to progress on recommendations relating to indirect taxes, the Government is committed to increasing the amount that is charged per tonne of carbon dioxide emissions from fuels to €100 by the end of this decade as recommended by the Commission. The annual increases in the carbon tax have been implemented to date as legislated for in Finance Act 2020. A phased removal of the diesel excise gap as well as other fossil fuel subsidies in the road transport sector was also examined in the 2024 Tax Strategy Group Paper, Energy and Vehicle Taxation. Finance Act 2024 introduced an emissions-based VRT system for category B vehicles (generally light commercial vehicles) which will apply from 1 July 2025.

In relation to the use of taxation in promoting public health, excise duty on tobacco products has increased consistently over the past decade and Budget 2025 provided the highest increase in excise, at a rate of €1 on 20 pack cigarettes in the Most Popular Price Category (MPPC). Additionally, legislation for E-Liquid Products Tax (EPT) was enacted in Finance Act 2024 and is subject to commencement by Ministerial Order. I expect to commence EPT later this year.

The Commission recommended that revenues deriving from Local Property Tax (LPT) should increase to form a substantially larger share of total revenues. In April, Government approved proposals to moderately increase LPT charges, with yield projected to increase by approximately 8% in 2026 as a result. Subject to enactment of the proposed Finance (Local Property Tax) (Amendment) Bill 2025, these increases will take effect from the 2026 LPT year, with revaluation taking place on 1 November 2025.

The Commission further recommended that an LPT surcharge should be introduced for vacant properties. Finance Act 2022 introduced a new Vacant Homes Tax (VHT), charged at a multiple of a property’s base LPT charge. The rate of VHT payable has since been increased twice, most recently in Finance Act 2024, with the tax applying at a rate of seven times a property’s base LPT charge with effect from the chargeable period that commenced on 1 November 2024. VHT is payable in addition to LPT on properties which are occupied for less than 30 days in a 12-month period.

In October 2024, my predecessor published the ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets’, a wide-ranging review of the funds and asset management sector. The Review fulfilled two of the recommendations of the Commission on Taxation and Welfare 2022 report. These were recommendation 6.6 which called for an examination of the taxation regime for funds and life assurance policies, with the goal of simplification and harmonisation where possible, and recommendation 6.7 which called for an examination of the regimes for Real Estate Investment Trusts (REITs), Irish Real Estate Funds (IREFs) and their role in the property sector, including how they support housing policy objectives, as well as a general review of the Section 110 regime.

The Report arising from the Review sets out a series of recommendations to ensure that, in pursuit of continued growth in the funds and asset management sector, Ireland’s funds sector framework remains resilient, future-proofed, supportive of financial stability and a continued example of international best-practice.

Officials in my Department are reviewing these recommendations, which I will consider in due course.In line with the Commission’s long-term funding recommendations, the Future Ireland Fund and the Infrastructure, Climate and Nature Fund were launched in August last year. These funds are designed to support sustained public investment and manage future fiscal challenges without relying on unstable windfall tax revenues.

Significant progress has been achieved in implementing many of the Commission’s proposals. Its report continues to serve as a strategic guide for this and future governments.