Tax Strategy Group Papers – Budget 2023

On Wednesday 10 August 2022 the Department of Finance published the Tax Strategy Group Papers for Budget 2023. In addition to the publication of a presentation paper by Brendan O’Connor, Economics Division at the Department of Finance, on the Irish Economic Situation and Outlook, the following 10 papers were published: 

  1. Economic Context for Taxation Policy
  2. Income Tax 
  3. Corporation Tax
  4. Property Related Tax issues
  5. Social Protection Budget Package – Budget 2023 Issues
  6. Climate Action and Tax
  7. Value Added Tax
  8. General Excise 
  9. Capital & Savings Taxes & Stamp Duty
  10. Response to Covid – Support Schemes   

The papers can be found here.

We have set out below some key highlights from the papers. 

Economic Context for Taxation Policy

  • This paper discusses the economic and fiscal context within which the taxation system operates following the recent pandemic and in light of the current cost of living increases, including future challenges. 
  • This paper also discusses recent trends in taxation and Ireland’s taxation system in an international context. 

Income Tax 

  • Issues covered in this paper include a summary of tax yields, information on the distribution and burden of Income Tax and USC, and provides an update on relevant reviews including the reduced rate of USC for medical card holders, Flat Rate Expenses, Trans-Border Workers, and the Key Employee Engagement Programme (KEEP). 
  • The paper also considers options around indexation and a potential third rate of Income Tax. 

Corporation Tax

  • This paper contains an overview of trends in Corporation Tax receipts and the strong performance of Corporation Tax over the previous two years. 
  • It also refers to consideration of Ireland’s position in the ongoing debate on international tax reform, the progress and potential implications of Pillars One and Two, and OECD and EU tax developments. 
  • Other items discussed include reviews of film relief credit, the Research and Development (R&D) tax credit, and the Knowledge Development Box (KDB).  

Property Related Tax issues

  • This paper discusses the Living City initiative, a review of the 2017 Report of the Working Group on the Tax and Fiscal Treatment of Rental Accommodation Providers, and the Help to Buy Scheme. 
  • Other items discussed include the Local Property Tax, collecting information on Vacant Properties, and the Residential Zones Land Tax. 

Social Protection Budget Package – Budget 2023 Issues

  • This paper describes the overall Department of Social Protection expenditure in its various programmes and discusses the impact of potential cost of living measures and social welfare for Budget 2023. 
  • This paper also looks at Poverty Trends in Ireland, Irish Labour Market Trends and Pay Related Social Insurance (PRSI). 

Climate Action and Tax

  • This paper gives an overview of Energy taxes, and related EU developments, Carbon Tax, and Motor Vehicle Taxes, and includes consideration of relevant policy options and challenges. 

Value Added Tax

  • This paper reviews the rates and structures of VAT. 
  • The paper also provides options for change and looks at VAT developments at EU and domestic level. 
  • Amongst other items discussed are the VAT rates on items such as Building Supplies, Medicines, Tourism and Electricity & Gas. 

General Excise 

  • This paper covers a number of topics including the Alcohol Products Tax, the Tobacco Products Tax and Betting Tax. 
  • The paper outlines the Public Health Policy and the recent changes to the rates, yield and consumption. 
  • It also covers the effects of cross-border trade and the illicit tobacco market. 

Capital & Savings Taxes & Stamp Duty

  • This paper provides an overview of the current position on Capital Gains Tax, Capital Acquisitions Tax, Deposit Interest Retention Tax (DIRT) and Stamp Duty, whilst considering potential options for Budget 2023. 

Response to Covid – Support Schemes   

  • This paper provides a review of the roles the various Covid support schemes played during the pandemic and how they assisted the economy to rebound quickly following the easing of restrictions in early 2022. 
  • These include the Employment Wage Subsidy Scheme (EWSS), Temporary Wage Subsidy Scheme (TWSS), COVID Restrictions Support Scheme (CRSS), and Tax Debt Warehousing. 

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