Commission on Taxation and Welfare 2021: Terms of Reference

As set out in the Programme for Government, the Commission of Taxation and Welfare is being established to independently consider how best the taxation and welfare systems can support economic activity and promote increased employment and prosperity, while ensuring that there are sufficient resources available to meet the costs of public services and supports in the medium and longer term.

The Commission’s work will have regard to the principles of taxation and welfare policy outlined within the Programme for Government, including the Government’s commitment to a pro-enterprise policy framework and to providing a stable and sustainable regulatory and tax environment. It will also take account of relevant issues such as the impact of the COVID-19 Emergency, ageing demographics, digital disruption and automation and the long term strategic commitments of Government regarding health, housing, and climate.

Towards this end the Commission is asked to:

• review how best the taxation and welfare system can support economic activity and income redistribution, whilst promoting increased employment and prosperity in a resilient inclusive and sustainable way and ensuring that there are sufficient resources available to meet the costs of public services and supports in the medium and longer term.
• examine what changes, if any, should be made to the social insurance system, including structure and benefits coverage, while ensuring sustainability. This will include consideration of the NESC report no 151 (November 2020)on the future of the Irish social welfare system and output from the Pensions Commission Pensions Commission regarding sustainability and eligibility issues in respect of State Pension arrangements. It will also include examination of how welfare policy can work in tandem with the taxation system to support economic activity, and while continuing to support those most vulnerable in our society in a fair and equitable way, having regard in particular to experience gained during the COVID-19 Emergency.
• examine how the taxation system can be used to help Ireland move to a low carbon economy as part of the process of meeting its climate change commitments as set out in the Climate Action and Low Carbon Development (Amendment) Bill 2021. This will include ensuring the sustainability of environmental tax revenue resulting from decarbonisation of the economy.
• consider the appropriate role for the taxation and welfare system, to include an examination of the merits of a Site Value Tax, in achieving housing policy objectives. This consideration should include reviewing the sustainability of such a role. It should also have regard to the experience of previous interventions in the housing and construction market and the current significant State supports for housing provision.
• consider how Ireland can maintain a clear, sustainable, and stable taxation policy as regards Ireland’s attractiveness to Foreign Direct Investment in a changing global taxation environment, including retention of the 12.5% corporation tax rate.
• review how best the taxation environment for SMEs and entrepreneurs can ensure that Ireland remains an attractive place to sustain and grow an existing business or to start and scale up a new business.
• review the adaptability of the taxation and welfare systems to the rise of digital disruption and automation and other technological changes.
• examine the process for reviewing taxation measures and expenditures in order to ensure it is aligned with best practice and where appropriate make recommendations as to how it can be improved.
• examine how effectively good public health is promoted in Ireland, and present relevant reforms to advance and incentivise this goal
• consider taxation practices in other similar sized open economies in the OECD to see what lessons Ireland can learn from such counties. This will include consideration of how the tax administration system should be modernised, building on real time payroll reporting which underpinned the existing modernisation of the PAYE system, and ensuring that the tax administration system meets best international standards. This will also include consideration of the potential for improvements in simplicity and administrative efficiency from integrating the taxation and welfare systems, as well as options for reform on the balance between the taxation of earned income, consumption, and wealth
• submit its report to the Minister for Finance by no later than 1 July 2022.