IMF says Coalition should lift local property taxes, rein-in discount VAT rates and pull more low paid workers into the tax net.

The IMF recommends raising local property tax rates to generate higher, more stable revenue. It calls for reducing preferential VAT or excise rates, including a 9% rate for restaurants, and for limiting personal income tax reliefs and exemptions. It suggests adding additional personal income tax bands with calibrated rates and replacing PAYE and Universal Social Charge thresholds with gradual phase-ins to strengthen work incentives. The IMF notes Ireland’s tax system is highly progressive, so changes would need mitigation through means-tested transfers. It also warns that persistent annual spending overruns weaken budget credibility and recommends a legally binding spending rule anchored in a long-term net debt target.

"“Increasing local property tax rates could provide higher and more stable revenue streams. The number of preferential VAT or excise rates, especially on items that disproportionately benefit higher-income earners, could be reduced. Broad-based personal income tax (PIT) reliefs and exemptions could be reduced. Introducing additional PIT bands with appropriately calibrated rates and replacing the Pay Related Social Insurance and Universal Social Charge thresholds with gradual phase-ins can also strengthen work incentives,” the IMF statement says."

"“Ireland's tax system is among the world's most progressive, meaning low earners pay least and higher earners most. Changes to would need to be mitigated by means-tested transfers, the IMF said.”"

"“The report also warns that continued annual spending overrun can weaken the credibility of the budget process itself. It recommends a legally binding spending rule, preferably anchored in a long-term net debt target, locking governments into tighter bounds when spending plans are being made.”"

"“The IMF says Ireland should increase local property taxes, rein-in discount VAT rates like the 9pc rate for restaurants due this summer, and pull more lower paid workers into the tax net.”"

Read at Irish Independent