Majority of Irish business concerned over impact of Commission on Taxation Report recommendations - according to PwC survey

A survey of business leaders by PwC reveals that a significant majority (87%) do not believe that the tax raising measures recommended by the Commission on Taxation will be balanced by tax reductions to give an overall tax neutral result. The area of greatest concern relates to taxes on labour, with an overwhelming 92% of participants believing that the recommendations would have a broadly negative impact in the personal tax area, and as a consequence a further significant majority of 84% believe that Ireland will be a less competitive location to do business.

Commenting on the results, PwC Partner Colm Kelly said, “The results highlight the importance of implementing the Commission’s recommendations in a manner which lowers, rather than increases taxes on labour. While this is consistent with the views expressed in the Commission Report, there is real concern that this will not happen”.

In the business tax area generally, Kelly commented, “We have a generally good business tax framework and many of the recommendations made by the Commission are positive. Notwithstanding this, 55% of the respondents feel that the overall impact of the Report on business will be negative. This is clearly the result of a high degree of concern focused on our personal tax system and related recommendations”.

One of the major concerns is the recommended abolition of the remittance basis of taxation. Ireland does not have an appropriate regime for attracting senior executives to locate in Ireland and the abolition of the remittance basis will make us even less attractive. As Ireland competes for international investment on the worldwide stage this is an increasingly relevant factor in attracting foreign direct investment. We are currently not competitive and some pragmatic steps must be taken to deal with this."

A strong majority (61%) believe that the Carbon Tax proposals should be implemented quickly, and dealt with in the budget later this year. Ronan MacNioclais, PwC Partner specialising in Energy and Renewables, said, “Business clearly recognises that this is just one of a number of changes in the environmental area which needs to be dealt with as soon as possible. Ireland has an opportunity to exploit a positive image in this space, and should aim to be a global leader in the taxation framework for energy generally and in the support of the renewable energy sector in particular”.

Key findings from PwC's survey on the Commission on Taxation proposed recommendations, if implemented:

  • An overwhelming majority (87%) believe that the tax raising measures recommended will notbe balanced with tax reducing measures to preserve the revenue neutral ethos of the Report;
  • Over three quarters (84%) said that Ireland will be viewed as less competitive as a place to do business;
  • The majority (61%) said that the carbon tax proposals should be implemented in Budget December 2009 while a third (35%) said it should be deferred to a later time when economic factors are more favourable;
  • From a business tax perspective, 55% of survey respondents felt that the impact of the recommendations would be broadly negative;
  • From a personal tax perspective, an overwhelming 92% of survey respondents felt that the impact of the recommendations would be broadly negative;
  • Over half (52%) of survey participants said that the Income tax proposals including social welfare and PRSI were the recommendations of most concern to them. A further 26% said that the pension recommendations were of most concern while just over a fifth (21%) said that the business recommendations were of most concern.

ENDS

The survey had over 300 participants of Ireland's business leaders.

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