Deloitte backs €3.1bn target

Tax specialist Deloitte has hinted at marginal increases in both capital gains and capital acquisition tax levels in next month’s budget, but has added it would be prudent of the Government to stick with a full €3.1bn adjustment for 2014.

In its pre-budget submission it said that given the cumulative adjustment needed over the next two years, “the prudent approach would be to make the full adjustment in 2014”.

However, with “no huge potential to raise more revenue from Vat” and the income tax well already “dry”, Deloitte partner, Padraig Cronin said that the bright spots may come in the form of tax relief initiatives for entrepreneurs and some pensions changes.

“Room for manoeuvre is slim, considering the 12.5% rate of corporate tax is sacrosanct, the recent increase in the top rate of Vat to 23%, the introduction of the new and much-debated property tax, and an already high marginal tax rate on income,” he said.

While the likes of Chambers Ireland and the Small Firms Association have, recently, called for a halving of the 33% capital gains tax rate for entrepreneurs; Deloitte partner, Niall Glynn said that the overall rate for capital gains tax is likely to rise by 3% to 36%; with Cat potentially being upped by 2% to 35%.

Mr Gynn added that inheritance tax could gradually rise from 33% to 40% — thus, coming into line with many of our European neighbours — over the course of coming budgets.

Mr Glynn, however, said that it was heartening that 2009 Commission on Taxation report recommendations for key capital gains tax/Cat changes haven’t been implemented, adding that there could be logic in offering roll-over tax relief for employment-driven entrepreneurs.