This podcast was recorded on Thursday 15 September 2022

Kim Doyle, Tax Director, speaks with Sarah Meredith, International Tax Director, and Kevin Devenney, VAT Director on; the setting for Budget 2023; the challenges facing the Ministers, and the measures needed to tackle the cost of living and energy crises.

Insights from the Annual Taxation Report from Government and the Commission on Taxation and Social Welfare Report are discussed.

Budget 2023 presents the Ministers with the unenviable challenge of balancing the demands of housing, climate and the cost of living and energy crisis. The Budget 2023 tax package was expected to cost in the region of €1bn, latest reports suggest that this figure could be closer to double that. Whatever the final costings, what is vital is that Budget 2023 has a real impact on the cost of living and energy crises.

The setting for Budget 2023 is strong growth in corporate tax take, with the corporation tax receipts year to date standing at €11.8 billion, 68.5% ahead of 2021, which was a very strong year in itself.  Overall tax revenues for the eight months into the year were running at €10.4bn ahead of the same period in 2021.

However, the Government’s annual Taxation Report highlights the vulnerabilities in the tax base due to the heavy reliance on two revenue streams; corporation tax and income tax and the serious repercussions for public finances should there be shock to either of these taxes.

The Report from the Commission on Taxation and Welfare published on the 14th of this month also noted that a long-term overdependence on Corporation Tax receipts poses significant sustainability risks and should be avoided. 

Kim, Sarah and Kevin discuss:

  • The tax measures needed to tackle the energy and cost of living crises.
  • The Commission on Taxation and Welfare proposals on VAT which include widening the VAT base and limiting the use of zero and two reduced rates of VAT.
  • How corporate tax policy can support Ireland’s competitive position on the international stage.
  • Changes needed to the Research & Development Tax Credit regime and to the Key Employment Engagement Programme.
  • Proposals in the Commission on Taxation and Welfare Report for companies which include simplification and harmonisation of how funds, life assurance policies and investment products are taxed.
  • The Commission on Taxation and Welfare Report includes some emotive and controversial proposals on capital taxes, such as extreme recommendations around Principal Private Residence Relief and reductions in the Capital Acquisitions Tax threshold between parents and children.
  • Simplification of the tax system, for example addressing the current length of the statutory corporation tax return form and reducing the surcharge and interest regimes for late returns to more reasonable levels.

Register for our Budget 2023 webinar