The recent verdict on Apple’s tax predicament has thrust taxation matters back into the limelight, particularly as the budget is due in just over a week. It has been correctly stated by government officials that tax revenue from these windfalls cannot be used for routine expenditure, nor should it be allocated to corporate tax returns of recent times.
This money should be set aside for singular instances of infrastructure and capital projects. Jack Chambers, in his inaugural and final budget for the sitting government, should assign a part of these unexpected earnings to a home-grown infrastructure fund. This fund could cover fundamental necessities in 2025 such as additional social housing, enlargement of classroom spaces, construction of school buildings and procurement of school buses to ensure every child has a school spot, enhancements to the public transport vehicles, pavements and our active travel routes to ensure their accessibility for individuals with disabilities. These basic, clear cut investments could significantly influence our society.
It’s praiseworthy that the government is managing expectations, illustrating that non-recurring incomes should be spent on one-time projects. Sadly, the focus on continuous tax measures needed to finance services and infrastructure for our expanding and maturing population doesn’t match. As of now, the emphasis seems to be on cutting income taxes, indirect taxes and levies as immediate responses to persisting cost of living issues. These strategies are not only poorly aimed, expensive, but would be better left untouched.
This current discourse fails to engage with the crux of the matter, that as we move forward, our taxation rates will need to escalate to maintain current service levels to cope with a growing and aging population. Moreover, we know that currently we are nowhere near the requisite level of public services and infrastructure to meet the demands of this burgeoning population. To address needs such as childcare, education, pensions, social welfare, healthcare, home care, housing modifications, disability and community care needs of 2025 and the subsequent years, we’ll need to generate more revenue, not reduce it.
To put it bluntly, it’s time we began to elevate taxes, rather than reducing them. On the first day of October, the Government needs to set in motion the repetitive taxation stipulations essential to finance the recurring allotment for delivering a suitable standard of social infrastructure for today’s populace, and to accommodate our future generations’ demands. The 2025 Budget can give a kick-start to this procedure through a few proposed steps.
A vital component of the social protection provision by the Government is seen through the social insurance arrangement. With our populace aging, the number contributing to the said fund is dwindling. An immediate strategy is required to prepare for any impending inadequacy and ensure the garnering of substantial PRSI from employers, employees, and those self-employed.
To bolster the social insurance fund, it is suggested that all PRSI rates witness an upswing by 0.5 per cent each year over the forthcoming five years, commencing from April 2025. Tax band modifications are not only expensive but need annual funding, and hardly trickle down to the lower-income workers. The Government, if indeed striving to support these workers and their families, should focus on lowering costs and bolstering access to public amenities rather than modifying tax bands.
For a fairer tax system catering to this demographic, it is essential that the Government ensures the two primary income tax credits are refundable, and employs rises in tax credits in place of tax band changes to introduce any alterations in income tax.
Considering the dire straits of the ongoing housing situation and homelessness crisis, the vacancy period for the vacant homes tax should be redefined to six months, and the rate of taxation amplified to 10 times the yearly local property tax level. This will encourage unoccupied units to return into the system. In order to hike the quantity of zoned land for housing purpose, the tax on land zoned for residential use must be hiked to 5 per cent of the yearly land value.
From a corporate tax perspective considering the debacle post the Apple judgment, it’s mainly a matter of fairness. Thriving companies yielding significant income ought to contribute to society rather than resorting to various schemes to bypass such contributions. The Government should gradually usher in a bare minimum effective corporate tax rate for all firms at 15 per cent by 2030, kicking off with a minimal rate of 10 per cent in the 2025 Budget.
In both funding public services and allowing economic activities to flourish, taxation proves instrumental for the moulding of Irish society. Its crucial contribution also lies in the redistribution of resources which serves to improve societal balance. Essentially, it forms the cornerstone of our societal infrastructure. It is paramount that, in the upcoming 2025 Budget, the government concentrates its efforts on bolstering our societal infrastructure rather than compromising our fiscal base.
The preceding analysis has been provided by Michelle Murphy, who is associated with Social Justice Ireland as a research and policy analyst.