The Tax Strategy Group (TSG) last week published its annual papers in advance of Budget 2024. In this year’s papers, the TSG identifies the key challenges for Ireland’s economy as capacity constraints, the aging population, digitalisation, de-carbonisation and de-globalisation. The TSG also highlights the country’s reliance on multinational companies and the resultant vulnerability to our corporation tax base.
The TSG is chaired by the Department of Finance and comprises senior officials and advisers from several governmental departments and offices. The TSG is not a decision-making body, rather its purpose is to set out different options to be considered in the Budget.
The full list of papers released by the TSG are as follows:
- Income Tax (TSG 23/01) includes a summary of tax yields, information on the distribution and burden of income tax and USC and policy considerations for reform. Other items discussed include Refundable Tax Credits, the Remittance Basis of Taxation and Pensions.
- Pay Related Social Insurance (TSG 23/02) examines issues including the Social Insurance Fund, certain “step-effect” anomalies relating to the exemptions from PRSI for lower paid workers, and the rate of PRSI for the self-employed.
- Corporation Tax (TSG 23/04) examines a range of topics such as corporation tax trends, implementation progress of BEPS, Pillar One and Pillar Two, EU tax developments, an update on Apple State Aid case and a discussion of various business support measures.
- Residential Property-Related Taxation Measures (TSG 23/06) discusses various income tax reliefs, including the Rent Tax Credit, and the treatment of rental income and examines residential zoned land tax (RZLT), local property tax (LPT) and vacant homes tax (VHT). Capital gains tax and capital acquisitions tax property reliefs are identified. A reduced rate of VAT for the supply and construction of housing is also considered.
- Climate Action and Tax (TSG 23/07) looks at how the tax system can be used to help meet Ireland's ambitious climate change goals of reducing emissions, increasing energy efficiency and developing less environmentally harmful policies. It puts forward options in respect of carbon, fuel related and motor taxes.
- Value Added Tax (TSG 23/08) reviews VAT rates and structures, considers options to assist SMEs and addresses climate change and the high costs of living.
- Capital & Savings Taxes (TSG 23/10) covers capital gains tax, capital acquisitions tax, DIRT and Stamp Duty and examines rates, yields and exemptions associated with these taxes. The paper sets out the current position on each and examines potential options for change in the context of Budget 2024.
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