Social Justice Ireland has warned against abolishing the Universal Social Charge (USC) in a policy document espousing tax reform including the need to make multinationals pay a fairer share.
The “Proposed Policy Framework for the Government of the 32nd Dáil” strategy, published today, focuses on areas from economic reform to the delivery of public services and sustainable governance.
SJI advises caution in relation to the USC, which Fine Gael committed to ending during the general election.
“Substantially reducing or abolishing the Universal Social Charge, or any other revenue stream, would serve mainly to narrow the exchequer revenue base and reduce the total tax-take at a time of global economic uncertainty,” it says.
A future programme for government should include a “comprehensive investment plan” to address infrastructure deficits in rural broadband, social housing, water infrastructure, childcare and education, among other areas.
It would also “end the current spiral of rising homelessness” by raising the level of investment currently proposed for the National Social Housing Strategy.
Debt deal
In the interest of securing a better deal for Ireland on its portion of debt, it recommends requesting European authorities consider further changes to the status of government bonds issued to replace promissory notes.
On taxation, SJI said it was incumbent on the next government to recognise that European-style services and infrastructure cannot be delivered without moving towards European-average levels of taxation. There should be an aim to increase the overall tax take towards 34.9 per cent of GDP, where the EU average is estimated at 47.9 per cent.
Reputational damage
SJI says the corporate sector must “pay a fair share of tax”, arguing the use of a low headline corporation tax rate has “recently caused reputational damage, due to the utilisation of the Irish tax regime by multinational corporations to avoid taxes”.
“The programme for government should recognise the damage being done and set a minimum effective corporate tax rate as a step towards a fair resolution of the current unacceptable situation. It should also include a commitment to negotiate a Europe-wide minimum headline corporation tax rate of 17.5 per cent.”
A national minimum effective corporate tax rate of 6 per cent would ensure large multinationals pay a fairer share of the corporate tax burden.
Other areas addressed in the 20-page document include sustainability issues, climate change and improved governance measures.
