Monday 21 October 2019

Raise taxes and boost spending - think tank

 

Housing is in need of ‘extra support’ says Nevin Institute. Photo: Bloomberg
Housing is in need of ‘extra support’ says Nevin Institute. Photo: Bloomberg

David Chance

The Government should look at generating extra funding for housing and childcare from increases to employer-related PRSI, property, inheritance and gift taxes and carbon taxes, a union-affiliated think tank will say in its 2020 budget submission.

The Nevin Economic Research Institute (NERI) will tell the Committee on Budgetary Oversight that while caution on the budget is warranted due to uncertainty over corporate tax revenues, public spending should be able to increase in line with the growth rate of the economy, put at 4.5pc a year.

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Both overall Government spending and tax revenue per capita are below EU averages.

One of the biggest areas of underspending is in research and development.

OECD data shows the total employee tax wedge for a single person on the average wage as a percentage of gross wage earnings is one of the lowest in the EU.

The gap is especially pronounced for employer contributions, which the think-tank said would have to increase by approximately three-quarters to reach the average of the EU15, excluding Ireland.

"In light of this, and in the context of substantial areas of underspend, the case for further tax cuts is extremely weak," senior economist Tom McDonnell will say.

Many pre-budget submissions from employer groups are urging the Government to cut capital-gains taxes, something NERI rejects.

"There is a strong argument for increasing revenues, given the need for additional support in housing and childcare," he will say. "Strong candidates for increases include employer PRSI, property taxes, inheritance and gift taxes and carbon taxes."

Irish Independent

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