Thursday 22 February 2018

Profits from rent to be considered for additional tax in budget

Ed Carty and Lyndsey Telford

Rental profits and dividends are being considered for additional tax in the budget, it has been confirmed.

Joan Burton, Social Protection Minister, said she was examining how to plug the 1.9 billion euro (£1.6 billion) hole in the social insurance fund used to pay some workers' illness or disability cover and jobseekers' allowance.

"This is the fund out of which benefits are paid to those who have made PRSI contributions," Ms Burton said.

"I can plug this hole either by increasing rates of PRSI, reducing benefits or reforming the system. My preference is to reform the system.

"One measure I am considering is widening the net to make certain types of unearned income such as rent profits and dividends liable to PRSI."

The option is being considered alongside plans to slice 1 billion euro (£856 million) off the public service pay bill by drastically reducing overtime rates and premium pay.

Tanaiste Eamon Gilmore said the huge salary savings would have to be discussed with unions as part of the Croke Park Agreement.

"All State organisations are well aware that there is a necessity to bring down costs of all kinds, including payroll costs," the Tanaiste said.

"What the Government is seeking to do is to get the savings in payroll where they can be achieved but that will be done in the framework of the Croke Park Agreement."

Cabinet ministers have met three times this week to examine proposals for the 2.2 billion euro tax increases and 1.6 billion euro spending savings being lined up for Budget 2012 on December 6.

In an address to the Cork Society of Chartered Accountants Ireland, Ms Burton said she opposed a special redundancy rebate scheme for profitable companies who lay off workers, citing the experience of workers at Talk Talk, Waterford and SR Technics in Dublin.

Under the current system businesses which make redundancies qualify for a 60% rebate from the Social Insurance Fund even if they are in profit.

The Department of Social Protection is seeking 700 million euro (£599 million) savings in the budget.

The Commission on Taxation recommended reforming the PRSI system in 2009.

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