Cowen Establishes Irish Commission On Taxation

by Jason Gorringe, Tax-News.com, London

18 February 2008

Irish Finance Minister Brian Cowen, has announced the establishment of a Commission on Taxation to review the structure, efficiency and appropriateness of the Irish taxation system.

According to Cowen, the terms of reference for the Commission are:

Having regard to the commitments on economic competitiveness and on taxation contained in the Programme for Government, in particular, the commitments:

• to keep the overall tax burden low and implement further changes to enhance the rewards of work while increasing the fairness of the tax system,
• to ensure that our regulatory framework remains flexible, proportionate and up to date,
• to introduce measures to further lower carbon emissions and to phase in on a revenue neutral basis appropriate fiscal measures including a carbon levy over the lifetime of the Government; and
• the guarantee that the 12.5% rate of corporation tax will remain.

The Commission has been invited, in the context of maintaining an equitable incidence of taxation and a strong economy, to consider the structure of the taxation system and specifically to:

• consider how best the tax system can support economic activity and promote increased employment and prosperity while providing the resources necessary to meet the cost of public services and other Government outlays in the medium and longer term;
• consider how best the tax system can encourage long term savings to meet the needs of retirement;
• examine the balance achieved between taxes collected on income, capital and spending;
• review all tax expenditures with a view to assessing the economic and social benefits they deliver and to recommend the discontinuation of those that are unjustifiable on cost/benefit grounds;
• consider options for the future financing of local government; and
• investigate fiscal measures to protect and enhance the environment including the introduction of a carbon tax.

As the introduction of a carbon tax requires a completely new tax charge and structure, the Commission has been asked to commence work in this area immediately. The Commission is requested to report on the results of its examination and consideration, and to make such recommendations to the Minister for Finance by not later than 30 September 2009.

Commenting on the initiative, Cowen stated:

"The work of the Commission will help establish the framework within which tax policy will be set for the next decade at least and it is important that the Commission take a strategic, considered and balanced perspective that recognises the evolving challenges we face."

"I believe that the wide range of skills and knowledge of the members of the Commission will help ensure that we get a report that can help shape future policy in a positive manner. I would like to thank the chair and members of the Commission for agreeing to serve on it."

The membership of the Commission consists of representatives from the Social Partners - representing the business, trade union, farming and voluntary sectors - and the accounting and tax advisory sectors that advise private sector business, both small and large, and includes economic expertise and people who have wide experience in central and local government.

Cowen concluded: “I decided to ask (Irish Revenue Commission Chairman) Frank Daly, who has wide-ranging senior public service management experience, to chair the Commission. The Commission will report as and when it sees fit but no later than 30 September 2009 in line with its terms of reference. I wish the members well in their work and look forward to receiving the outcome of their deliberations on this wide and complex remit."

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