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Deloitte Calls For Cuts To Irish Marginal Tax Rates

by Jason Gorringe,, London

19 September 2017

The upcoming Irish Budget should help Brexit-proof the economy and reduce the marginal tax rate for all taxpayers, says Deloitte.

Launching Deloitte's Budget forecast, the firm's Head of Tax, Lorraine Griffin, said: "While tax changes in this year's Budget are expected to be modest, the Government has an important opportunity to signal the path ahead in terms of corporate and personal tax strategy and reform. Overall, Brexit-proofing the economy is expected to be a focus of the Budget, to the extent within our control, with significant investment and solutions needed in housing, infrastructure, and education, to enhance Ireland's competitiveness and build capacity for a growing economy."

She added: "The Government should look to reduce the marginal tax rate for all taxpayers in Ireland, and improve current incentives or introduce additional incentives to not only attract, but also to retain talent. While modest measures are anticipated in Budget 2018, given the fiscal space available, there is an opportunity to set out a roadmap for personal tax reform and marginal tax rate reduction over time."

Deloitte predicts that while there will be no radical changes to the income tax regime, there may be some movement on the marginal rates of tax, or at least a timeline to bring the top marginal rate to below 52 percent.

Deloitte is also keen that the Government implement wider changes to the taxation of share-based remuneration, although this may not be feasible given the level of fiscal space available in the Budget. It expects the Government to press ahead with plans for an SME-focused share scheme, which it believes will be positively received by private Irish companies and their employees but will be disappointing for domestic and foreign multinationals which do not meet the SME thresholds.

Elsewhere, Deloitte would like to see the capital gains tax (CGT) regime amended to grant entrepreneurs higher lifetime limits and lower rates of CGT. However, it does not expect the Government to bring the CGT entrepreneur relief fully into line with the UK's equivalent scheme, and said that the absence of a significant improvement, or clear strategy for improvement, would represent a missed opportunity.

Deloitte anticipates the announcement of new measures to incentivize property owners to rent out their properties. It said that there should be a targeted tax relief in Ireland's cities to boost supply, together with a capital gains tax rollover relief to allow deferral of CGT once the proceeds of a sale are reinvested in further rental property. There could also be a new tax deduction for repairs and refurbishment of rental property.

TAGS: capital gains tax (CGT) | tax | investment | Ireland | tax incentives | entrepreneurs | employees | corporation tax | tax thresholds | education | multinationals | tax rates | tax breaks | tax reform | individual income tax

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