Business group urges Government to cut VAT

THE Government has been urged to cut VAT in December’s Budget rather than income tax.

Business federation Chambers Ireland said it was a less obvious but equally consumer friendly approach to tax reform.

Chambers chief executive John Dunne said it would put money back in people’s pockets and help keep inflation in check.

“In a pre-election Budget with healthy public finances it is unrealistic to pretend that there will not or should not be some ‘give-away’ element.

“By cutting VAT instead of income tax, consumers still benefit in terms of more money in their pockets and reduced prices.

“But it would also be less inflationary and more equitable — one-third of the population doesn’t pay income tax whereas cutting indirect taxation benefits all consumers.”

Mr Dunne said VAT should be standardised at 18% and exemption thresholds increased.

Chambers Ireland also urged the Government to replace stamp duty with a more balanced property tax.

It had been suggested abolishing the money-spinning levy would cost the Government €3 billion.

The system Chambers Ireland propose would see levies tied directly to local authority spending.

“Local communities would be transformed by such an injection of discretionary funding which would dramatically underpin services to business and quality of life,” Mr Dunne said.

Chambers Ireland also called for the decentralisation programme to be reassessed, the national child care strategy to be further developed and a comprehensive strategy on pensions.