The Institute was represented by Dr. Brian Keegan, Director of Advocacy and Voice, at the National Economic Dialogue (NED) 2022 last week.  The theme of the forum, hosted by both the Department of Finance and the Department of Public Expenditure and Reform, was Building Economic Resilience to deal with International Challenges. The NED provides a forum for public consultation and discussion ahead of Budget 2023. The discussion centred on the cost-of-living challenges arising against an economic backdrop of war and global energy spikes, the risk of exacerbating inflationary pressures and the need to ensure sustainable public finances whilst reducing dependence on corporation tax receipts. Dr. Keegan emphasised to Ministers the importance of capacity building within the economy and the contribution of the accounting profession to the services sector. He also took the opportunity to outline elements of the CCAB-I’s pre Budget 2023 submission which was launched this week.  Documents and speeches from the NED can be found on gov.ie.

Stopping flow of landlords leaving the market critical to address housing crisis Frontload personal tax allowances for younger workers to halt brain drain  23 June 2022 – Tax measures that support individuals and make Ireland an attractive place to live and work are critical to protect competitiveness, according to the main accountancy bodies in Ireland. CCAB-I which represents over 50,000 professional regulated accountants published its pre-Budget submission today, containing a range of measures to alleviate cost of living pressures and to tackle barriers to recruitment and retention across the Irish economy. CCAB-I identifies two key areas for Budgetary focus; improving housing supply to address the crisis in the housing market, and reforming personal tax allowances to help people as they build careers, homes, and families.  Parity in the treatment of corporate and individual landlords Ireland needs a functioning housing market to attract and retain talent to our shores. The submission states that the residential property market is in crisis, with not enough houses to buy or rent in the private sector and not enough houses being built by the State for those who need social housing. Government sees the private rental market as a source of taxes, and this is not the correct approach in a housing crisis. Commenting Cróna Clohisey, Tax & Public Policy Lead, Chartered Accountants Ireland said “Landlords are an essential feature of a fully functioning residential property market, however in general, landlords consider it to be no longer economical for them to continue in the market. In the Irish tax system, corporate landlords holding rental property have a more favourable tax treatment, at 25%, whereas individuals face rates of 52% and beyond.  “The 25% rate should be extended to individuals to address some of the inequity. By removing disparities, the tax system could be effectively harnessed to encourage landlords to stay in the market and new entrants to meet the supply shortage.” The submission also proposes:  Local property tax should be allowed as a deduction against rental income Wear and tear rates for fixture and fittings should be increased from 12.5% to 25% per annum to facilitate landlords investing in the maintenance of properties Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work To incentivise loss making landlords to remain in the market, rental losses in a tax year could be used against other income (such as employment income) to reduce tax payable.  Capital tax solutions to encourage the supply of accommodation As landlords withdraw from the rental market, some opt to sell the property, others do not. The current rate of capital gains tax (CGT) of 33% is too high.   The CCAB-I proposes the following measures will prevent the extraction of rental properties from the market, reduce the displacement of tenants, and result in more residential properties becoming available to purchase: Make available a relief from CGT on disposal of a rental property, conditional on the property being sold with a tenant in situ and/or a requirement for the property to continue in use as a rental property. Reduce the standard rate of CGT from 33% to 20% to release residential property back into the property market for younger generations. Outside of housing, as detailed in full in the submission, a lower rate of CGT would also encourage innovation and risk taking which in turn would drive investment activity and improve returns for entrepreneurs. Reforming personal tax allowances Traditionally Ireland’s investment policy has focused on taxation from the employer’s perspective, however in 2022, retaining talent is a prominent concern among employers. The CCAB-I proposes that consideration be given to reforming personal tax allowances so that allowances are ‘frontloaded’ at the outset of a person’s career. The submission suggests that such reform is in line with government policy on FDI which notes “talent” among the key areas which makes Ireland a consistent target for such investment    Clohisey continued “We need to turn our attention to personal tax rates, as they are impacting attraction and retention of talent. Recalibrating personal tax allowances is a long-term project and the biggest obstacle will be overcoming political resistance to change. Nonetheless, personal tax allowance reform should form part of Ireland’s overall policy to retain talent. “Speaking on behalf of a profession where most are in the early stages of their careers, this could be achieved by increasing allowances available to those under 35 at a time when many are taking the first major life steps such as starting a family or approaching the first rung of the property ladder, while reducing the allowances available to those over 55 for example. ” In addition to reforming personal tax allowances, the CCAB-I supports the proposal to introduce a third rate of income tax. Presently, a worker in Ireland begins to pay tax at their marginal rate once they have earned €36,800 which is below the average industrial wage. A third rate would make the tax system more equitable provided that the entry levels to each band of tax are appropriate. Other measures proposed by the CCAB-I include    Leave Employer’s PRSI unchanged to remove barriers to employment creation. Overhaul and simplify the R&D credit to make it more accessible to SMEs. Reform the discriminative tax treatment of service companies if Ireland is serious about encouraging the prosperity of indigenous businesses.  Avoid any measures which diminish the already modest capital tax reliefs available to Irish entrepreneurs.  To encourage FDI and competitiveness, Section 110 companies should be allowed to deduct withholding taxes suffered on the receipt of distributions or interest received.  Pension auto-enrolment incentives should not disturb established tax reliefs for pension contributions.  A more flexible Tax-Saver Commuter ticket should be introduced to match the hybrid working model that has emerged for certain workers. ENDS Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I). Read the submission in full here.  For more information Jill Farrelly  PR & Communications Manager   Chartered Accountants Ireland  About the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I) The Consultative Committee of Accountancy Bodies-Ireland is the representative committee for the main accountancy bodies in Ireland. It comprises Chartered Accountants Ireland, the Association of Chartered Certified Accountants, the Institute of Certified Public Accountants in Ireland, and the Chartered Institute of Management Accountants which combine to represent over 50,000 professional regulated accountants in Ireland.  

To be truly successful in the fast-changing world of work, employers must start to think more strategically about the skills they need now as well as the skills they will need in the future, writes Niamh O’Brien. We are hearing a lot these days about emerging workplace trends and disruptors, such as Artificial Intelligence, smart working, and the gig economy. While it’s clear that all are having a marked impact on how we work and experience the workplace, what is less clear for many employers is how best to factor these far-reaching changes into their ongoing approach to people management. Evolution of technology, processes and skills Technology not only influences the work employees do but can also change the entire working environment—by facilitating remote working and providing access to a broader talent pool, for example, or transforming everyday processes and procedures. As a result, employers must start to think differently about their people, the skills they need right now, and the skills they are likely to need tomorrow. For many, this will require a more strategic, agile, and future-focused approach to managing their talent pool—not just for ‘right now’, but also for the future. Adding to this challenge are the evolving needs and demands of today’s workforce. More people are looking for greater opportunities to experience meaningful work, greater flexibility in their working lives, and more opportunities for personal development, training and upskilling. Employer value proposition To be truly successful, your people strategy must therefore encompass and build on all of these elements, but—no matter how complex or demanding the process of putting it together may be—your future-focused people strategy won’t, in itself, be enough.   As with any strategy, the real challenge often lies in bringing it to life, and it’s impossible to talk about people strategy without touching on Employer Value Proposition (EVP). Your EVP – that is, your employee branding and the way your organisation markets itself to attract talent – is integral to your people strategy. Without robust employee branding, you will lose people to your competition. The only way to gauge an active and engaged EVP is through measurement and KPIs. Keep on top of this and you are far more likely to achieve the desired results. This is because a measurable strategy, with clearly defined KPIs and a cyclical model of assessment and realignment, is far more likely to deliver results. Future-proofing your people strategy Your strategy should also span your entire talent ecosystem, including permanent employees, temporary or contingent staff, contractors, consultants, and gig workers. Only by mapping flexible solutions, which allow you to fill skills gaps in your organisation today and plan for the future, will you be able to implement a truly effective people strategy that can support long-term growth. Niamh O’Brien is Director of Talent Management at BDO.