The Tax Commission suggested that there is a need to widen the tax base and shift the balance of taxation from taxes on labor to taxes on capital, wealth and consumption.
He called for a substantial increase in the yield of land and property tax and a substantial hike in capital gains tax and capital gains tax. New taxes such as road user fees are also needed as revenue from fossil fuel taxes declines, the report said.
“Given Ireland’s demographic profile, the level of public debt and a number of other economic risks, it is inevitable that the total amount of tax required to fund public services will increase in the coming years”, the commission’s report said.
Other risks listed include “significant uncertainty” about future revenues from corporation tax, which Ireland collects mainly from large multinational corporations and public funds needed to tackle climate change.
Commission chair Professor Niamh Moloney of the London School of Economics said the commission was aware of the financial challenges families were facing due to rising inflation and that many of its recommendations would be difficult to implement.
Finance Minister Paschal Donohoe said the report raised serious questions about how Ireland would reform its “long-term” tax and welfare systems.
The government has pledged tax cuts as part of the annual budget to be announced on September 27 to help consumers and businesses cope with rising energy prices.