Public policy centre

Welcome to Chartered Accountants Ireland’s public policy centre.

We use our research to inform the public policy debate both nationally and internationally.

Tax

This week we take a look at the latest Brexit contingency plan released by the Irish Government to cope with a no deal Brexit which covers many areas but not where and how checks on the Northern Ireland border will take place. In other news, the European Commission also lowered growth estimates for the Eurozone area for 2020. Where will the border checks be? The Irish Government has assessed that there remains a significant risk of a no deal Brexit on or after 31 October and in response have released a contingency action plan which sets out the short-term risks associated with this outcome.  The plan also provides details of Government work to prepare for these risks.  A no-deal Brexit, according to the report, would be “highly disruptive” and have “profound economic and legal implications” for Ireland. The document is over 100 pages long and covers a wide variety of sectors and issues including preparing ports and airports, financial services, taxation, aviation, the UK land-bridge, agri-food and fisheries, customs requirements, tourism and energy. Specifically on the border with Northern Ireland, the report says “there should be no illusion – a no deal Brexit would result in far-reaching change on the island of Ireland.  This would particularly impact North-South trade, which could no longer be as frictionless as it is today.”   While the report outlines ways in which traders can prepare for customs administration and tariffs, it doesn’t address where and how checks of goods would take place when crossing the Northern Ireland border into Ireland in the event of a no-deal.  The Government has been clear throughout the Brexit debate; it wants to avoid a hard order while retaining full membership of the EU single market. It’s difficult to know how this will be achieved given that EU law dictates that checks on some goods must be carried out when entering the EU market from a country outside the EU.   Businesses need this information and they need it urgently not least for supply chain management.   Cróna Clohisey called for clarity around the border in the Sunday Business Independent at the weekend. The document is also light on services (aside from financial services) and doesn’t detail the impact of a no-deal Brexit on the cross-border recognition of professional qualifications. Other Brexit bites: The next nominee for President of the European Commission, Ursula von der Lyen, hints that Brexit might be delayed for a third time and she hopes it may not happen at all. But a fresh deal is not on the table. Revenue will have 450 additional staff in place by 31 October to prepare for Brexit. This is in addition to the 400 staff already hired to April 2019. If you are an Irish trader exporting to the EU and use a UK body to certify your products, you may need to take action according to the National Standards Authority.Read more. Sterling fell sharply against the Euro to close to 90p in anticipation of the UK crashing out of the EU without a deal on 31 October. Online shopping from companies in the UK could become more expensive with the addition of duties in the event of a no-deal Brexit. European Commission warns of Irish economy overheating The European Commission caveats forecasts of a steadily growing Irish economy with a potential risk of overheating.  Brexit and unpredictable multi-national corporation behaviours in the area of investment are said to be a few of the risk factors contributing to this. In uncertain times: Eurozone growth estimates lowered The European Commission also lowered estimates of Eurozone growth and inflation for 2020 amidst news of political uncertainty and trade war with the US. These estimates highlight reports of economic weakness in the region just two weeks before the European Central Bank’s next policy meeting. “The resilience of our economies is being tested,” said European Commission Vice President Valdis Dombrovskis. Future jobs initiative in Ireland   Last week, the Irish Government announced the development of a major new SME Policy as part of its Future Jobs Initiative.   The announcement came during an SME and entrepreneurship conference hosted by the Government in conjunction with the OECD. The conference was the result of an ongoing consultative process with the OECD which will feed into the new policy which is set to focus on things like encouraging female entrepreneurship and improving financial assistance for companies.  The policy will be released in October. Read all our updates in our Public Policy webcentre.

Jul 15, 2019
Tax

This bulletin takes a look at the top jobs agreed by EU leaders last week after three days of talks, the new draft trade deal agreed between the EU and South American countries and the June 2019 exchequer figures in Ireland which show that a record tax take could be on the cards this year.  EU elections After several days of negotiations, Italian MEP and socialist David-Maria Sassoli was elected as President of the European Parliament last week.  Mr Sassoli will succeed Italian Antonio Tajani. EU leaders also agreed to nominate German Defence Minister Ursula von der Leyen as the next President of the European Commission.  Ms von der Leyen, who will succeed Jean-Claude Junker is a member of the European People’s Party and will become the first female president of the European Commission. Belgian Prime Minister Charles Michel will become head of the European Council, succeeding Donald Tusk. The EU leaders have also agreed to nominate Christine Lagarde, the head of the International Monetary Fund as leader of the European Central Bank. Ireland’s June 2019 Exchequer figures €26,671 million in tax revenue was collected in the first six months of 2019, almost 7 percent up on same period last year, according to the latest exchequer returns.  With year-on-year increases across corporation tax, income tax, VAT and excise duties, the government might be on course for another record tax take this year.  Corporation tax generated almost €4.2 billion which was just below expectations but 3.5 percent ahead of 2018 figures. Income tax of almost €10.5 billion was collected in the six months to 30 June 2019, €749 million ahead of the equivalent period in 2018.   This growth is an indicator of strong employment growth and incidentally this week, the CSO published statistics showing that the seasonally adjusted unemployment rate for June 2019 was 4.5 percent, down from 5.9 percent in the same period last year. VAT, a key indicator or consumer spending and sentiment, was €345 million ahead of 2018 figures but 1.9% below targets for 2019.  While on the face of it, the figures might suggest that the Minister for Finance has greater scope in terms of spending and taxes in October’s Budget, the Government has been warned not to repeat the mistake of using extra monies to fund day-to-day spending increases.  Time will tell. EU and Mercosur reach political agreement on a free trade deal The EU became the first major partner to agree a trade deal with Mercosur, a bloc of countries comprising Argentina, Brazil, Paraguay and Uruguay The agreement, once signed off, will cover a population of 780 million and will remove the majority of tariffs (c. 91 percent) on EU exports to Mercosur, saving €4 billion in duties per year.  Its expected trade in goods will amount to €88 billion per annum, while services will be €34 billion.  For example cars exported to Mercosur currently attract 35 percent tariffs, chemicals (up to 18 percent), clothing (up to 35 percent) and pharmaceuticals (up to 14 percent) – all of these tariffs will be eliminated. Both sides to the agreement will now perform a legal revision of the agreed text to come up with the final version. The European Commission will then translate it into all official EU languages and submit the agreement to EU Member States and the European Parliament for approval. Read all our updates in our Public Policy webcentre.

Jul 08, 2019
Tax

Read about the Government’s Summer Economic Statement published last week and the Institute’s contributions to the National Economic Dialogue.  Summer Economic Statement Unlike other years, Minister Paschal Donohoe has to consider two budgetary scenarios when drafting this year’s Summer Economic Statement: One, to prepare for the real possibility of a no-deal Brexit, and the other, which plans for an orderly exit after the 31 October Brexit deadline. Releasing the Summer Economic Statement last week, Minister Donohoe said that the “external environment” is becoming “increasingly challenging” and that a “disorderly Brexit” is now a “real possibility”, which is why the Irish Government needs to plan for such an event. The Statement confirms to us that under an orderly Brexit scenario, the Government is targeting a surplus of 0.4 per cent of GDP for 2020.  This target will accommodate a budgetary package of €2.8 billion, of which €2.1 billion has been pre-committed to expenditure measures leaving €700 million for further allocation in Budget 2020.  However, a disorderly Brexit scenario could result in a deficit in the region of 0.5 to 1.5 per cent of GDP for next year.  In September, the Government will decide, based on information available at the time, which scenario will form the basis for Budget 2020. The Summer Economic Statement sets out the key elements of the Government’s budgetary strategy and this year centres on the ongoing uncertainty surrounding Brexit. The Statement sets out that the objective of budgetary policy is the protection of domestic living standards irrespective of what format Brexit takes and aims to firstly avoid overheating the economy and, secondly, to build up appropriate buffers so that budgetary policy can support the economy in the event of a disorderly Brexit. National Economic Dialogue Representatives from Chartered Accountants Ireland attended the National Economic Dialogue which took place last week. We represented members on Brexit concerns and on items included in our pre Budget 2020 submission. The Dialogue facilitates an open and inclusive exchange on the competing economic and social priorities facing the government. More details on the programme can be found on the Department of Finance’s website. The Institute’s opening statement to the National Economic Dialogue is also available. Read all our updates in our Public Policy webcentre.

Jul 01, 2019

Pensions in Ireland - A responsible way forward

A significant majority of Chartered Accountants are worried about Ireland's pension deficit and favour pension auto-enrolment to guard against poverty in retirement.

In its research report, Chartered Accountants Ireland examines the challenge of an ageing population in Ireland, the reasons that some private sector workers do not provide for their pensions and also looks at a number of different pension funding models used in other countries.

Chartered Accountants Ireland has over 26,000 members working in every sector on the island of Ireland, and is uniquely placed to identify the challenges that the pension deficit will bring.

Read our report on the PDF below.

CTA - Pensions in Ireland-min
NEWS BODY - Pensions in Ireland A responsible way forward-min

Seminar : Pensions under the spotlight
Chartered Accountants Ireland’s members engaged in a comprehensive discussion on the private pension crisis in Ireland at a seminar with Institute President Shauna Greely held in Dublin last Tuesday evening (6 March 2018). 

The event also saw the formal launch of the Institute’s report Pensions in Ireland: A responsible way forward which advocates auto-enrolment. View photos from the event >>>