Minister for Finance, Paschal Donohoe TD, announced the establishment of the Commission of Taxation and Welfare on Monday, 19 April. London School of Economics Professor Niamh Moloney will chair the Commission. The Commission is established to independently consider how Ireland’s taxation and welfare systems can support economic activity and promote increased employment and prosperity. The Commission’s report, which is due by July 2022, will likely identify post-pandemic changes for implementation in Budget 2023 and beyond.

The establishment of a Commission to consider the taxation and welfare system formed part of the Programme for Government. The Commission is to have regard to the impact of the COVID-19 crisis, and long-term developments such as ageing demographics, the move to a low-carbon economy and the rise of digital disruption and automation.

The Commission is tasked with the following:

• Review how best the taxation and welfare system can support economic activity and income redistribution whilst promoting increased employment and prosperity and ensuring the availability of resources to meet the cost of public services and supports.
• Examine what changes, if any, should be made to the social insurance system, including structure and benefits coverage while ensuring sustainability. This will include consideration of the NESC report no 151 (November 2020) on the future of the Irish social welfare system and of output from the Pensions Commission regarding sustainability and eligibility issues regarding State Pension arrangements.
• Consider taxation practices in similar-sized open economies in the OECD with a view to modernising the tax administration system, building on real-time payroll reporting underpinning the existing modernisation of the PAYE system, and ensuring the tax administration system meets international best standards. This includes consideration for improvements in administrative efficiency and simplicity of an integrated tax and welfare system, as well as reform options on the balance between the taxation of earned income, consumption and wealth.
• Review taxation measures and expenditures to ensure alignment with best practice.
• Review how best the taxation environment for SMEs and entrepreneurs can ensure that Ireland remains an attractive place to sustain and grow an existing business or to start and scale up a new business.
• Consider Ireland’s FDI taxation policy in a changing global taxation environment, including retention of the 12.5 percent corporation tax rate.
• Consider the appropriate role for the taxation and welfare system, including an examination of the merits of a Site Value Tax (a tax on the ‘unimproved value of land’, as an alternative to LPT), in achieving housing policy objectives.
• Examine how the taxation system can be used to help Ireland move to a low carbon economy as part of the process of meeting its climate change commitments as set out in the Climate Action and Low Carbon Development (Amendment) Bill 2021.

Members will be appointed to the Commission in the coming weeks to bring the necessary expertise to fulfil the objectives of the Commission’s work from relevant areas, including taxation, welfare, economics, legal and broader civil society.