Thursday, February 6, 2020
Ireland's governing party Fine Gael has published its election manifesto, which includes proposals to reduce the income tax burden and reform the taxation of SMEs.
The manifesto includes a "fairer tax" package. It noted that whereas the average full-time wage in Ireland is EUR47,596, people start paying the top rate of tax (40 percent) at EUR35,300. The party has therefore pledged to gradually increase the point at which an individual pays the higher rate to EUR50,000, over a period of five years.
According to the manifesto, "The annual benefit for the average worker at the end of five years is just under EUR3,000, which will ensure that tax levels keep up with projected income growth. If we don't make this change, more of people's income will go to tax as their wages increase."
Fine Gael would also increase the Universal Social Charge (USC) exemption threshold from EUR13,000 to EUR20,500. The aim would be to ensure that people on low incomes are no longer captured in the USC net. The party would increase the Earned Income Tax Credit for the self-employed to match the PAYE Tax Credit at EUR1,650 and maintain that parity in future years.
The manifesto also includes plans to reform the taxation of SMEs. The Government recently commissioned an external review of the capital gains tax (CGT) entrepreneur relief. If returned to government, Fine Gael would review CGT rates in each Budget, with the objective of supporting innovation-driven businesses. It would simplify the administrative process for applications for the research and development (R&D) tax credit, including introducing a pre-approval procedure and reduced record-keeping requirements.
The manifesto reiterated Fine Gael's commitment to the 12.5 percent rate of corporation tax and to "the retention of national sovereignty over taxation policy." It added that under Fine Gael, Ireland would "continue to engage constructively on international tax reform, while critically analysing proposals that may not be in Ireland's long-term interests."
According to the manifesto, Fine Gael "recognizes that taxation policy needs to catch up with a changing digital economy." However, it stressed that this work "is best done through the OECD" and that the party "will not support unilateral measures that could risk trade and undermine the competitiveness of exporting EU member states."