IBEC: Low tax regime central to competitiveness

IBEC: Low tax regime central to competitiveness

IBEC have said the recommendations of the Report of the Commission on Taxation have welcomed the fact that a low, broadly-based tax regime was recognised as central to ensuring that Ireland remained competitive.

the group that represents Irish business said the report reflected the long-standing need to modernise the Irish tax system and

IBEC Chief Economist David Croughan said: "The report strikes a balance between the need to raise revenue in an equitable way and ensuring that the tax system facilitates economic growth and employment.

"Ireland's relatively low tax burden has been central to past economic success and is important for recovery. Tax reform should therefore be introduced on a revenue neutral basis, to avoid undermining economic growth and competitiveness."

IBEC welcomed the fact that no proposals were made to increase the corporation tax rate, which it said was central to job creation and Ireland's attractiveness as a place to do business.

It also stressed that changes proposed to the income tax system must be designed to ensure that they do not act as a disincentive for high-skilled mobile labour from abroad.

On the issue of a carbon tax, Mr Croughan said: "It is important that Ireland makes the transition to a low carbon, energy efficient economy. While a carbon tax has been planned for some time, it is important that it is introduced in a way that best promotes energy efficiency and the shift towards a low carbon economy. It will only succeed if it has the effect of changing the way we use energy and promoting more innovative ways of working."

In a welcome recognition of the needs of a modern economy the Commission recommends further improvement to the R&D tax credit and advocates the use of accounts depreciation over existing capital allowances in a recognition of the short economic life of assets in a rapidly changing technological environment.

"IBEC has certain concerns on the proposals with regard to pensions, as a new hybrid rate may reduce the incentive to save for those on the higher rate, with no guarantee that it would encourage those on the lower rate to increase their pension provision," said Mr Croughan.

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