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Death and Taxes

A major tax report has caused ructions in government, but what did it actually say?

The Commission on Taxation and Welfare said our ageing population meant we must change how we collect tax.

RARELY HAS AN independent report landed on the government’s desk and made such as splash as this week’s one from the Commission on Taxation and Welfare.

The printers were still cooling on the 547-page report when Tánaiste Leo Varadkar was already out to dismiss some of its conclusions. Taoiseach Micheál Martin came out the following day to say he didn’t agree with the Tánaiste

The report, which was commissioned by the government, came about after Fianna Fáil, Fine Gael and the Greens agreed to seek a major review of Ireland’s taxation system for the decades ahead. 

The parties promised that the commission would look at the future of taxation in the context of “ageing demographics, the move to a low-carbon economy, and the rise of digital disruption and automation”. 

The Commission was made up of variety of sources and experts from areas including tax and welfare, business, unions, and NGOs. 

After 18 months, this week they were given their answer. Simply put, major changes are required if the State is to maintain the level of services it currently provides. 

The reasons for this are many but chief among them are that; an ageing population will mean less receipts from income tax, the move from fossil fuels will mean less tax from related taxes and the bloated cash cow that is Corporation Tax cannot be relied upon. 

Perhaps more difficult still to swallow is that, as well as these sources of taxation being likely to reduce, the overall level of tax take will have to increase. 

The 14-person Commission chaired by Professor Niamh Moloney has been keen to stress that the timing of the report is not ideal, given pressures currently being faced by people, but that it’s about the challenges to be faced over the next 15 years.

What was recommended? 

Cabinet arrivals 001 Minister Paschal Donohoe outside the Department of Finance. Leah Farrell / Leah Farrell / /

While challenges were outlined in the detail in the report, the Commission also published potential solutions.

These solutions amounted to a broadening of the tax base, essentially taking taxes from a wider variety of sources and ensuring that the overall take is more balanced.

In general, the Commission says the balance needs to be shifted away from the reliance on taxation that is based on income.

It’s a move that would make the tax system more sustainable and “limit the need for increases in tax rates”.

But while th Commission argues that Income Tax should be a less of a focal point of the overall tax take, it does not argue for a long-term decrease.

In relation to Income Tax, the Commission states that there should be no “further erosion of the Income Tax or USC base”.

Essentially, that theses taxes should not be cut over the long term, adding that: “Rates of USC should be determined by income level and not by any other eligibility criteria.”

Specifically, it says that “factors such as age or personal characteristics” should not be considered.

For example, people aged over 70 and those with medical cards (with less than €60,000 a year) are currently entitled to a reduced rate of USC. This would end under the Commission’s proposals. 

If Income Tax is not decreasing, what additional taxes does the Commission want to see? 

The Commission is clear thatthe share of taxation from property and wealth is low and should increase”.  

Specifically, the report says: 

The Commission recommends that overall yield from wealth and capital taxes, including property, land, capital acquisitions and capital gains taxes should increase materially as a proportion of overall tax revenues.

It adds: 

While the Commission is not recommending a net wealth tax; the yield from Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT), as well as from taxes on land and property, should be substantially increased. Distortions within the system, such as the treatment of death for Capital Gains Tax purposes, should be removed.

Future of Media report 006 Leah Farrell / Leah Farrell / /

The call for an increase in CGT and CAT are among the recommendations that particularly irked Varadkar and led to him saying some of the Commission’s proposals were “straight out of the Sinn Féin manifesto”.

“Increasing inheritance tax, for example, increasing taxes on people’s savings. There’s no way that’s going to happen while Fine Gael are in government,” he said. 

Inheritance tax forms the bulk Capital Acquisitions Tax receipts, €481 million out of €582 million CAT receipts in 2021. 

Last year, an OECD report found that the gap in Ireland between those who are likely to inherit and those who are not is the highest of all the countries surveyed and that inheritance taxes are easier to collect than other forms of wealth taxation.

Other recommendations 

The Commission’s recommendations are extensive and it has published a separate outline of its findings in a 38-page executive summary. 

Included in the recommendations are: 


  • The Commission recommends widening the VAT base and limiting the use of zero and reduced rates of VAT. The VAT treatment of goods and services to which those rates currently apply should be reviewed to assess if it continues to be appropriate.
  • The Commission recommends that the rate of VAT on those goods and services currently attracting a second reduced rate (currently 9%) should be increased over time to the reduced rate (currently 13.5%).
  • Due to the relatively large share of goods and services attracting zero and reduced rates of VAT in Ireland, the Commission also recommends that the reduced rate of 13.5% should be increased progressively over time. 

Carbon Tax 

  • The Commission recommends that the phased increase in the Carbon Tax to €100 per tonne of carbon dioxide emitted by 2030 is implemented. 

Congestion charge

  • The Commission recommends the introduction, in the medium term, of distance, location and time-based road usage charges. Planning for such charges should include early identification of the appropriate technology to be used in calculating and applying them.
  • The Commission recommends the introduction of congestion charges in key urban areas, based on a number of key metrics linked to environmental and individual impact. These charges should be reviewed following the introduction of road usage charges. 


  • A Local Property Tax surcharge should be introduced for vacant properties.
  • The Commission recommends that the Help to Buy scheme be allowed to expire as planned at the end of 2022.
  • Revenues deriving from Local Property Tax (LPT) should increase to form a substantially larger share of total revenues through the adjustment of the basic rates of taxation and potentially through an adjustment of valuation bands. The ability of local authorities to decrease the basic rate of LPT should be removed.

Among the specific measures that have caused controversy is the suggestion that tax relief for private health insurance should be phased on on the basis of the implementation of Sláintecare.  

Speaking this week on RTÉ’s Morning Ireland programme, one of the Commission members Professor Barra Roantree said overall it is about raising taxes but doing it in a way that is sustainable. 

The recommendations that we’ve set out here, particularly think in relation to land, property and capital are about raising taxes in the most efficient way, in the most equitable way. In a way that comes with the smallest economic cost.

“Again, taxes do have an economic cost but we need to look at this into the future, we need to really address these difficult decisions and what we’ve set out here is an agenda and a roadmap for reform of the years ahead.”

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