An increase in the level of taxation is unavoidable in the years to come, Social Justice Ireland has said.
The independent think tank and justice advocacy organisation has said more revenue will need to be collected just to maintain current levels of public services and supports. It said over the next few years new taxes need to raise around €3billion to fund “a fairer society”.
The organisation launched its budget submission in Dublin on Tuesday morning.
It has recommended introducing a minimum effective corporation tax rate of six per cent, which they say would yield in excess of €1billion for the Exchequer in 2019. It also recommended making all discretionary tax reliefs/expenditures only available at the standard 20 per cent rate in Budget 2019, which they said would yield €480m.
The organisation has called for restoring the 13.5 per cent VAT rate for the accommodation sector, as part of a two-year process to phase out the 9 per cent VAT rate for the hospitality sector as well as introducing a tax on empty houses and a site value tax on underdeveloped land.
The think tank said the Government should equalise the excise duty on petrol diesel, which they say will yield €68 million in 2019, and increase tax on in-shop and online betting by 3 per cent. They say this measure will yield €150m for the Exchequer.
The organisation has called for an extra €1.25 billion to go towards resources needed for an additional 90,000 social housing units. Their briefing also sets out €1.1bn investment is needed for healthcare and disability services and €505m for rural and regional development, to fund the rollout of high quality broadband and investment in transport.
It has recommended an increase of €6.50 a week in social welfare payments, an equalisation of jobseekers rates for under-26s and a rise in direct provision payments.
Eamon Murphy, economic and social analyst with Social Justice Ireland said “the current low tax take is unsustainable” and that the organisation has been advocating for a minimum effective corporation tax regime for years.
“I can’t understand the resistance to it,” Mr Murphy said. “It’s only going to affect firms that are consistently paying below six per cent which is the interim rate that we have recommended to the Government.
“It’s been well documented that certain large multinationals pay effective rates in Ireland of two or three per cent and sometimes even less than that.”
Mr Murphy said addressing the country’s current challenges effectively will take a decade a more.
“We are overrun with crises in this country; a crisis of healthcare provision, a social housing crisis, a poverty crisis that sees children as the largest demographic living in poverty,” he said.
“We need to measure ourselves by how we treat the weakest in our society. By that measure we are failing.”
Sean Healy, director of Social Justice Ireland said the damage done through the economic and budgetary crises of the last decade is still being felt by Ireland’s most vulnerable.
“Despite the phoenix like recovery of the economy - now growing at least twice as fast as our European counterparts - we still have almost 800,000 people living in poverty, the largest proportion of which are children,” he said.
Mr Healy acknowledged while Ireland’s economy has been the fast growing in Europe for a number of years, he said “there are huge gaps and critical choices to be made if those gaps are to be filled”.
Social Justice Ireland’s main proposals:
INVESTMENT PACKAGES
Social Housing: €1,250 million in addition to what’s already committed in Government plans towards increasing the resources needed to provide an additional 90,000 social housing units.
Healthcare and disability: €1,112 million investment prioritising social and community care, disability, mental health and Slainte Care.
Rural/Regional Development: €505 million to help complete the rollout of high quality rural broadband, as well as additional investment in rural transport, a rural enterprise, retrofitting houses and community supports.
Education: €448 million investment in areas such as adult literacy, Deis, skills development and digital education
Pensions: A universal pension financed mostly by reducing tax-breaks that currently favour the better-off.
Social Welfare: €331 million which includes an increase of €6.50 a week on social welfare payments and an increase in direct provision payments.
Children: €180 million focused on Early Childhood Care and Education, paternity leave and affordable childcare.
Official Development Assistance: An additional €136 million as a contribution towards increasing the aid budget over the next seven years to the UN target of 0.7 per cent of GNI.
TAX REFORM
Standard rate all discretionary tax expenditures
Standard rate tax break on all pension contributions
Remove tax refund element for research & development tax credits
Introduce a minimum effective corporate tax rate
Equalise Excise Duty on diesel and petrol
Increase accommodation sector VAT rate to 13.5 per cent
Increase tax on in-shop and online betting by 3 per cent
