Budget 2024

With Budget Day approaching, Tom Woods outlines his recommendations for ensuring this year’s measures support social and economic progress With Budget 2024 just two weeks away, Ireland is experiencing mixed economic fortunes. On the positive side, near full employment and significant exchequer receipts would suggest that the Government has an unprecedented range of policy choices to consider. Nevertheless, the economy is also facing constraints. Inflation and interest rates offer limited room for manoeuvre, making selecting the right policy choices much more difficult. Housing KPMG suggests introducing a new low VAT rate on the sale of new builds to help with the affordability of purchasing a new home. We also support the reintroduction of mortgage interest relief to help homeowners with rising interest rates and growing mortgage repayments. We recommend that the taxation of professional landlords be reformed to put them on a similar footing to trading businesses. This would help to attract and retain more landlords and boost the supply of housing stock in the rental market. Reintroducing a controlled and targeted Section 23-type rented residential relief (tax relief applying to rented residential property in a tax incentive area) would also promote housing investment in less sought-after areas. The workforce As a small, open economy, our successful tax policy has helped make Ireland a location of choice for multinational business. As a country at close to full employment, we need an attractive personal tax regime to keep and grow mobile talent to support the growth of domestic and international businesses in Ireland. There is a range of budgetary measures that would help us in this regard, including the widening of the personal tax bands and credits, consideration of a new intermediate tax rate of, say, 30 percent, and the automatic indexation of credits and bands to help dampen the impact of inflation and protect the value of wages. The taxation of share-based remuneration could also be simplified, and we would like to see some improvements to the Special Assignee Relief Programme (SARP). Innovation and entrepreneurship The impact of foreign direct investment (FDI) on the Irish economy can’t be overstated. However, the ongoing changes to the international tax landscape emphasise the importance of having the most enticing regime within the new rules. As mentioned above, an inviting personal tax regime will become more critical, as will having an appealing research and development (R&D) regime to promote and foster more innovation. Several measures could be introduced to promote more innovation, including an upfront entitlement to cash refunds of R&D tax credits for smaller businesses. The R&D tax credit of 25 percent could be improved to either 30 percent or 35 percent to make it more attractive internationally. Moreover, the rules and the application process to qualify for this credit should be simplified. Other jurisdictions continue to refine and improve their R&D offering, so it has never been more important for Ireland’s regime to be as inviting as possible. International changes also underscore the need to support the growth of the domestic sector.  We have made several recommendations to support SMEs. These include introducing a new 20 percent capital gains tax (CGT) rate on the sale of shares in SMEs and some improvements to entrepreneurs’ relief to promote investment in SMEs. We advocate simplifying the rules underpinning the Employment Incentive Investment Scheme (EIIS) to make it more accessible and easier for businesses to raise capital. We also propose that the standard income tax rate of 20 percent be applied to dividends paid by SMEs. This should encourage promoters of SMEs to remain committed to growing their business and enable companies of scale to emerge from the domestic SME sector without the need to sell down equity. Climate Ireland’s ambitious climate goals will present challenges and opportunities for individuals and businesses. Several tax supports could be considered to help Ireland achieve its climate goals. These include measures to promote private finance for green investments via ESG bonds and pension funds. We also believe that tax measures could be introduced to help accelerate the move to electric and hybrid vehicles and support the agricultural sector in its transition to more sustainable practices. Inflation While the exchequer receipts are in rude health currently, this revenue may be vulnerable in the future, and a measured approach will be needed when deploying the available resources. While there is potential for some measures to impact inflation, the significant benefits of achieving policy objectives need to be weighed up against their inflationary impact. The measures unveiled in the forthcoming budget will signal the Government’s direction of travel across many issues. The good news is the resources are there to help sustain our social and economic progress. Tom Woods is Head of Tax at KPMG

In every issue of The Bottom Line, we ask students for their thoughts on a particular topic. This month, we want to know: What do you hope to see in Budget 2024? Ellen Roycroft EY There is no denying the cost-of-living crisis is one of the largest issues faced by the Irish populace and that one of the main downfalls of this is the rising price of electricity and fuel.  The electricity credits afforded to all households last year helped with this burden substantially. I believe that a further instalment of these credits could set a buffer for those struggling to get through what will already be an expensive winter ahead. In addition to this, I would hope to see an increase in the fuel credit for those living in fuel poverty. The credit, in my opinion, should be extended and the criteria for meeting it relaxed.  With an increasing number of people needing financial help to heat their homes, this would help, in my opinion, both with the affordability of fuel for those already receiving the benefit and for those who may be just on the verge of fuel poverty. Aleksandar Elliot KPMG My hope is that Budget 2024 will be about helping those who need it most through the challenging environment we’re faced with currently, as well as building a more sustainable long-term future. In the short term, the focus should be on the most vulnerable and shielding them from the impact of inflation. Increases in pensions and fuel allowance, as well as help with back-to-school costs through child benefit, should be the top priority.  We cannot forget small businesses that would benefit from the retention of lower VAT rates that are due to expire. Finally, a key component of the cost-of-living crisis is energy. I would like to see the government seize the opportunity to help people reduce their energy usage, which will, in turn, help reduce bills whilst benefitting the environment in the long term. Retrofitting schemes, green finance and electric vehicle grants would be central to such efforts. Sean Cahill EY One of the biggest struggles for students and young professionals is affording rent. From battling to find suitable accommodation to being able to afford it, the housing crisis, in my opinion, is the biggest issue Ireland has now. Last year’s €500 rent tax credit was a brilliant first step in the right direction by our government in addressing this. However, with no short-term solution to this crisis, I feel it's the government's duty to provide further assistance. Since last year, rent has increased exponentially across urban areas in Ireland. Boosting tax credits and reliefs and even looking at setting rent ceilings would not only ease  the burden on tenants but also have a spin-off effect on local economies.  In the 2024 budget, I would love to see the government implementing a strategy to further help tenants and also show a clear long-term plan on how they intend to bring rental rates back to affordability.

The Minister for Finance, Michael McGrath TD, has welcomed growth in Modified Domestic Demand (MDD) in the second quarter of the year Despite the growth, the Minister noted that there were ‘several headwinds’ including constraints in infrastructure and slower growth among trading partners, and that it would be against this backdrop that Budget 2024 would be framed. The Minister for Finance, Michael McGrath TD, has welcomed growth in Modified Domestic Demand (MDD) in the second quarter of the year. Despite the growth, the Minister noted that there were ‘several headwinds’ including constraints in infrastructure and slower growth among trading partners, and that it would be against this backdrop that Budget 2024 would be framed. The figures as reported by the CSO in its publication of the Quarterly National Accounts showed that while MDD expanded by one percent relative to the previous quarter, consumer spending increased by 0.9 percent while GDP increased by 0.5 percent over the quarter. However, GDP was down 0.7 percent on an annual basis, reflecting the volatility of production in the multinational sectors and falling demand for certain pharma exports. Commenting on the figures, Minister for Finance, Michael McGrath T.D., said: “Firstly, while GDP was up on a quarterly basis in the second quarter, I am conscious that it fell by -0.7 per cent relative to the same period last year. This reflects a fall in Covid-related pharmaceutical exports triggered by the passing of the pandemic, as well [an] easing exports associated with so-called ‘contract manufacturing’. As has been well documented, multinational production in Ireland is extremely volatile and, given the outsized role the multinational sector plays in our economy, GDP is clearly not a useful measure of domestic living standards. In terms of the domestic economy, I am encouraged to see that Modified Domestic Demand (MDD) – my preferred metric of domestic economic activity – grew at a solid pace in the second quarter of the year. These data are consistent with trends in the labour market, where figures published last week show employment at its highest level ever at end-June. Importantly, consumer spending was a key driver of growth in the second quarter, increasing by 0.9 per cent over the quarter. This reflects a number of factors including the easing in inflationary pressures over recent months, the strength of our labour market and the role that Government support has played in supporting households. With three-quarters of our working age population in employment – a record high – this should support continued expansion of consumer spending in the coming quarters. While today’s data confirm continued growth in the domestic economy, I am conscious of several headwinds. Our economy is clearly operating at full-employment and capacity constraints, in both our housing and labour markets, are increasingly binding. Externally, growth is slowing in some of our main trading partners, and this could have knock-on implications for Irish exports. It is against this backdrop that Budget 2024 is being framed. We will, once again, need to strike the right balance: ensuring that budgetary policy is calibrated in a manner which avoids adding to the price pressures in our economy while, at the same time, supporting households and delivering the infrastructure and public services that our society needs.”

Representatives from the Institute, under the auspices of the CCAB-I, met with the Minister for Finance, Michael McGrath T.D and his team earlier this week to discuss CCAB-I’s pre-Budget 2024 submission. The need to simplify the tax system and reduce the administrative burden on businesses was discussed, as were the complexities experienced by small businesses, in particular, when availing of several of the business tax reliefs. The importance of long-term investment in critical infrastructure, not least housing, in order to maintain Ireland’s position as a competitive place to do businesses and also to retain and attract talent was also highlighted.  

9 July 2023 – The success of future generations must be prioritised over short-term measures in Budget 2024, to ensure economic and societal progress in the decades to come. This is according to the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I), the umbrella group which represents over 50,000 professional accountants, as it published its Pre-Budget Submission today.   The submission, entitled ‘Supporting Ireland’s Transition to a Sustainable future’, prioritises the long-term, highlighting that while the Irish economy has doubled in size in the past decade, we still have significant shortfalls in healthcare, housing, transport infrastructure and education. Demographics are exacerbating these shortfalls.  The submission identifies two key areas for budgetary focus;  The introduction of an intermediate 30% rate of income tax to reduce the tax burden on younger workers; and Investment in housing capacity to accommodate our young workforce and our significant FDI community. Commenting, Tax and Public Policy Lead at Chartered Accountants Ireland, Cróna Clohisey said:  “In the absence of a long-term focus, we risk an intergenerational divide becoming a chasm. The half-year Exchequer returns of €41bn published this week highlight more than ever the difficult decisions government faces in Budget 2024. This sum represents an 11% increase on the same period last year, but it is now, when the Exchequer is relatively robust, that government should limit itself to modest budgetary tax adjustments and put real spending power behind sustained investment in infrastructure, particularly housing.  “Our economic position is strong, but it is not future-proofed. There is a real divide between generations in terms of access to housing, pensions security and many other indicators. We need Ireland to be a country our young people choose to stay in and that others choose to bring their skills to, but we cannot do that without long term, strategic interventions in transport, health, and housing.”  Reforming the income tax system  Ireland’s 40% tax rate is high in comparison to other competitor countries and the CCAB-I believes that introducing a third rate of income tax of 30% would make the system more equitable. It would also enhance Ireland’s attractiveness as a place to work, particularly among younger workers.   Ms Clohisey continues: “Workers in Ireland pay income tax at a rate of 40% once they earn €40,000. This entry point is below the average wage and is significantly lower than most countries across the UK and Europe where incidentally having more than two tax rates is extremely common.” “Speaking on behalf of a mobile profession where most are in the early stages of their careers and are planning their futures, introducing an intermediate 30% rate would make the system more attractive and more equitable, lessening the tax burden on workers and putting more money in their pockets. An intermediate rate would also support Ireland’s FDI offering. The government needs to take immediate action to address the inequities that clearly exist within the system.” The submission also proposes: Income tax credits and rate bands should be index-linked to earnings to account for inflation Employers’ PRSI should not be increased The rate of CGT and CAT should be reduced from 33% to 20% The CGT annual exempt amount should be increased from €1,270 to €5,000  The Category A threshold for CAT should be increased from €335,000 to €350,000  The CAT small gift exemption should be increased from €3,000 to €5,000. Housing measures The CCAB-I believes that small private landlords are critical in boosting Ireland’s housing supply, particularly in provincial towns where demand is not sufficient to justify large-scale investment in the private rental sector.  Ms Clohisey continues: “Our members tell us that one of the biggest barriers to expansion is the lack of adequate, affordable housing that is reasonably located for their staff. We do our young people an enormous disservice by limiting their opportunities to live and work where they want to.” “The tax burden of small private landlords should be the same as that for companies at the 25% rate, rather than at the marginal rate of 52%. On the supply side, to enable property developers to manage their cash-flow, a tax debt warehousing system, like that created during the pandemic, could be developed whereby the collection of taxes such as PAYE is delayed until all housing units have been sold.” The submission also proposes: Local property tax should be allowed as a deduction against rental income Wear and tear rates for fixture and fittings should be increased from 12.5% to 25% per annum to facilitate landlords investing in the maintenance of properties Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work ‘Rent-A-Room’ relief should be increased to match the standardised average rent and the ‘cliff-edge’ for qualifying for relief should be removed. The Rent Tax Credit should be permanently included in legislation. ENDS Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I). Read the submission in full here.  About the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I) The Consultative Committee of Accountancy Bodies-Ireland is the representative committee for the main accountancy bodies in Ireland. It comprises Chartered Accountants Ireland, the Association of Chartered Certified Accountants, the Institute of Certified Public Accountants in Ireland, and the Chartered Institute of Management Accountants which combine to represent over 50,000 professional regulated accountants in Ireland.              

Institute reacts to Autumn Statement announcements  17 November 2022 – Today’s Autumn Statement did little to support businesses and their employees through the tough times ahead, according to Chartered Accountants Ireland. The Institute, which represents over 5,200 members working in businesses and practices across Northern Ireland, commented as the Government announced its ‘Autumn Statement’ in Westminster, with the Chancellor acknowledging that the UK is in recession after the biggest monthly increase in inflation in over 40 years.  Commenting, Dr Brian Keegan, Director of Public Affairs, Chartered Accountants Ireland said,  “Businesses in Northern Ireland are feeling the effects of this inflationary crisis particularly acutely. These businesses are also dealing with continued uncertainty over trading arrangements in the context of the ongoing Protocol negotiations along with the absence of devolved government.  “We saw during the COVID-19 pandemic that the Government can react speedily at a time of crisis. As this crisis deepens, more needs to be done by the Government to develop and deliver much needed supports through the tax system. For many businesses, these could be a vital lifeline for survival and, ultimately, job protection.  “For example, the Government could reintroduce extended relief for trading losses, as it did during the pandemic. This would enable businesses to claim relief for losses much earlier which would generate vital tax refunds and improved cash flow. “Tax policy and the tax system can, and must, be used to not only build strong and sustainable economies but to provide crucial support via targeted interventions.” ENDS     

‘Unprecedented’ the new normal as government again leverages tax system to help individuals and businesses in 3rd ‘crisis’ Budget    Accountants will have critical role in helping businesses access new energy support scheme supports Tuesday 27 September 2022 – The cost of living Budget announced by the government should help SMEs survive the coming months, but there has been little emphasis on addressing capacity constraints in the health, education, and housing sectors. Reacting to Budget 2023, Chartered Accountants Ireland, the largest professional accountancy body on the island of Ireland, noted that the unprecedented has now become the new normal as the Government responds to crisis circumstances for the third year in a row.  Commenting, Dr Brian Keegan, Director of Public Affairs, Chartered Accountants Ireland said “Previously, Budget Day was mainly focused on collecting taxes, however, since Budget 2021, the focus has shifted to targeting behaviour by intervening directly in the operation of the economy. We saw the effectiveness of this when the economy recovered so quickly from COVID-19 disruption. The Government has learned from this and is again using the tax system to put money back in businesses and people’s pockets to help in the face of inflation and rising energy costs.” Administering the Temporary Business Energy Support Scheme (TBESS) Accountants played a vital role in the last two years in advising businesses on how to administer the pandemic-era support schemes and the Institute noted the role its members will now come to play in assisting both government and SMEs in implementing the new TBESS.  Keegan commented “Today’s decision to introduce a new energy support scheme, similar to the pandemic-era EWSS, will come as a major relief for many small businesses that are facing crippling energy bills over the winter months. These supports cannot last forever, but they are an example of the targeted approach by the state which has worked well in the past.     “Simplicity and efficiency in implementation are going to be critical in getting the supports to businesses as quickly as possible.” Missed opportunity to tackle capacity constraints  The Institute highlighted the ongoing need to tackle capacity constraints in the supply side of the Irish economy, for example in rental accommodation, healthcare, skills shortages, and education. It noted that this lack of capacity is a huge problem.   Keegan commented  “There has been more emphasis today on demand rather than on ability to supply. There is an increase in the number of doctor only medical cards, but it will increase the pressure on GPs. Our third level system is accessible and after today even more affordable, but are we investing enough in our universities and colleges? Some much-needed relief was provided today for hard-pressed renters, but are the measures to improve the supply of accommodation going to improve the supply quickly enough?” On the housing front, today’s announcements will not help renters find accommodation as landlords are still leaving the market.   Keegan commented “It was a missed opportunity to not use the Budget as a means to incentivise landlords to remain in the rental market. Targeted tax measures should have been introduced to prevent the removal of rental properties from the market, reduce the displacement of tenants, and result in more residential properties becoming available to purchase. The omission of such measures from this Budget will lead to continued hardship for those renting or trying to buy in the current market.” In its pre-Budget submission, Chartered Accountants Ireland, under the auspices of the CCAB-I, outlined a range of tax measures and supports which could have been used to target elements of the housing crisis. These proposals included: Making available a relief from Capital Gains Tax on disposal of a rental property, conditional on the property being sold with a tenant in situ and/or a requirement for the property to continue in use as a rental property. Local property tax to be allowed as a deduction against rental income. Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work.  ENDS

Minister Michael McGrath delivers pre-Budget commentary in Dublin    Talent the “engine of growth”, so employees must be front of mind in Budget 2023 22 September 2022 – Budget 2023 must meet the twin challenges of addressing both business and social imperatives next week. This was the message delivered to Minister for Public Expenditure & Reform Michael McGrath T.D. as he addressed a gathering of Chartered Accountants Ireland Leinster Society in Dublin today.  With five days to go until Budget 2023 is unveiled, members of Ireland’s largest professional accountancy body stressed the need to use the Budget as a tool to improve the wider business operating environment, specific business needs and, crucially, the lot of individual taxpayers. This holistic approach is critical to support individuals and ensure that Ireland is an attractive place to live and work.    The Society reiterated that with a variety of financial and administrative burdens on the horizon, from legislative developments on auto-enrolment, the right to request remote working, and statutory sick pay, government interventions need to happen in a considered and balanced way that doesn’t add extra pressures on business.   Commenting, Chair of Chartered Accountants Ireland Leinster Society Ann-Marie Costello said  “In its pre-Budget submission and commentary over the summer the Institute stressed that addressing business needs in isolation won’t help our economy to weather this turbulence and remain competitive. Talent is the engine of economic growth, so in tandem with targeted measures to assist business, this Budget needs to address infrastructural and personal finance issues so that people can survive and succeed in Ireland.” From Institute engagement with members, it is clear that in addition to the unprecedented challenges of inflation and rising energy costs, among the biggest challenges facing businesses are people-related, both attracting them and managing them. Over 60% of members cite competition for talented people as a significant challenge. Costello continued          “Ireland’s investment policy has traditionally been focused on taxation from the employer’s perspective, however in 2022, this focus needs to be widened. In recent weeks, a survey by this Society pointed to continued strong earnings prospects for Chartered Accountants working across Leinster, including for newly qualified members, however in spite of this, accounting has been listed on the Department of Enterprise, Trade and Employment’s Critical Skills Occupations List since 2016. This is all the more reason that employee needs must be placed at the very core of a successful business environment.” Chartered Accountants Ireland’s Pre-Budget submission, under the auspices of the Consultative Committee of Accountancy Bodies Ireland (CCAB-I) contains measures to address some of the most pressing societal issues facing Ireland. It proposes that consideration be given to reforming personal tax allowances so that allowances are ‘frontloaded’ at the outset of a person’s career. The submission suggests that such reform is in line with government policy on FDI and should form part of Ireland’s overall policy to attract and retain talent. In addition to reforming personal tax allowances, the CCAB-I supports the proposal to introduce a third rate of income tax to make the tax system more equitable provided that the entry levels to each band of tax are appropriate. Of equal importance is ensuring that Ireland has a functioning housing market to house its population and attract and retain talent to our shores. In its Pre-Budget submission, Chartered Accountants Ireland noted that the residential property market is in crisis, with not enough houses to buy or rent in the private sector and not enough houses being built by the State for those who need social housing. It proposed the extension of the 25% tax rate enjoyed by corporate landlords to individuals, so that the tax system could be effectively harnessed to encourage landlords to stay in the market and new entrants to meet the supply shortage. ENDS About Chartered Accountants Ireland Leinster Society   Chartered Accountants Ireland Leinster Society is a district society of Chartered Accountants Ireland, representing over 14,950 Chartered Accountants throughout Leinster. Chartered Accountants Ireland is Ireland’s leading professional accountancy body, representing over 31,000 members around the world and educating 7,000 students. The Institute aims to create opportunities for members and students, and ethical, sustainable prosperity for society. An all-island body, Chartered Accountants Ireland was established by Royal Charter in 1888 and now has members in more than 90 countries. It is a founding member of Chartered Accountants Worldwide, the international network of over one million chartered accountants. It also plays key roles in the Global Accounting Alliance, Accountancy Europe and the International Federation of Accountants. Chartered Accountants Ireland members provide leadership in business, the public sector and professional practice, bringing experience, expertise, and strict standards to their work for, and with, businesses in every sector. Chartered Accountants Ireland engages with governments, policy makers and regulators on key issues affecting the profession and the wider economy.        

Stopping flow of landlords leaving the market critical to address housing crisis Frontload personal tax allowances for younger workers to halt brain drain  23 June 2022 – Tax measures that support individuals and make Ireland an attractive place to live and work are critical to protect competitiveness, according to the main accountancy bodies in Ireland. CCAB-I which represents over 50,000 professional regulated accountants published its pre-Budget submission today, containing a range of measures to alleviate cost of living pressures and to tackle barriers to recruitment and retention across the Irish economy. CCAB-I identifies two key areas for Budgetary focus; improving housing supply to address the crisis in the housing market, and reforming personal tax allowances to help people as they build careers, homes, and families.  Parity in the treatment of corporate and individual landlords Ireland needs a functioning housing market to attract and retain talent to our shores. The submission states that the residential property market is in crisis, with not enough houses to buy or rent in the private sector and not enough houses being built by the State for those who need social housing. Government sees the private rental market as a source of taxes, and this is not the correct approach in a housing crisis. Commenting Cróna Clohisey, Tax & Public Policy Lead, Chartered Accountants Ireland said “Landlords are an essential feature of a fully functioning residential property market, however in general, landlords consider it to be no longer economical for them to continue in the market. In the Irish tax system, corporate landlords holding rental property have a more favourable tax treatment, at 25%, whereas individuals face rates of 52% and beyond.  “The 25% rate should be extended to individuals to address some of the inequity. By removing disparities, the tax system could be effectively harnessed to encourage landlords to stay in the market and new entrants to meet the supply shortage.” The submission also proposes:  Local property tax should be allowed as a deduction against rental income Wear and tear rates for fixture and fittings should be increased from 12.5% to 25% per annum to facilitate landlords investing in the maintenance of properties Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work To incentivise loss making landlords to remain in the market, rental losses in a tax year could be used against other income (such as employment income) to reduce tax payable.  Capital tax solutions to encourage the supply of accommodation As landlords withdraw from the rental market, some opt to sell the property, others do not. The current rate of capital gains tax (CGT) of 33% is too high.   The CCAB-I proposes the following measures will prevent the extraction of rental properties from the market, reduce the displacement of tenants, and result in more residential properties becoming available to purchase: Make available a relief from CGT on disposal of a rental property, conditional on the property being sold with a tenant in situ and/or a requirement for the property to continue in use as a rental property. Reduce the standard rate of CGT from 33% to 20% to release residential property back into the property market for younger generations. Outside of housing, as detailed in full in the submission, a lower rate of CGT would also encourage innovation and risk taking which in turn would drive investment activity and improve returns for entrepreneurs. Reforming personal tax allowances Traditionally Ireland’s investment policy has focused on taxation from the employer’s perspective, however in 2022, retaining talent is a prominent concern among employers. The CCAB-I proposes that consideration be given to reforming personal tax allowances so that allowances are ‘frontloaded’ at the outset of a person’s career. The submission suggests that such reform is in line with government policy on FDI which notes “talent” among the key areas which makes Ireland a consistent target for such investment    Clohisey continued “We need to turn our attention to personal tax rates, as they are impacting attraction and retention of talent. Recalibrating personal tax allowances is a long-term project and the biggest obstacle will be overcoming political resistance to change. Nonetheless, personal tax allowance reform should form part of Ireland’s overall policy to retain talent. “Speaking on behalf of a profession where most are in the early stages of their careers, this could be achieved by increasing allowances available to those under 35 at a time when many are taking the first major life steps such as starting a family or approaching the first rung of the property ladder, while reducing the allowances available to those over 55 for example. ” In addition to reforming personal tax allowances, the CCAB-I supports the proposal to introduce a third rate of income tax. Presently, a worker in Ireland begins to pay tax at their marginal rate once they have earned €36,800 which is below the average industrial wage. A third rate would make the tax system more equitable provided that the entry levels to each band of tax are appropriate. Other measures proposed by the CCAB-I include    Leave Employer’s PRSI unchanged to remove barriers to employment creation. Overhaul and simplify the R&D credit to make it more accessible to SMEs. Reform the discriminative tax treatment of service companies if Ireland is serious about encouraging the prosperity of indigenous businesses.  Avoid any measures which diminish the already modest capital tax reliefs available to Irish entrepreneurs.  To encourage FDI and competitiveness, Section 110 companies should be allowed to deduct withholding taxes suffered on the receipt of distributions or interest received.  Pension auto-enrolment incentives should not disturb established tax reliefs for pension contributions.  A more flexible Tax-Saver Commuter ticket should be introduced to match the hybrid working model that has emerged for certain workers. ENDS Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I). Read the submission in full here.  About the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I) The Consultative Committee of Accountancy Bodies-Ireland is the representative committee for the main accountancy bodies in Ireland. It comprises Chartered Accountants Ireland, the Association of Chartered Certified Accountants, the Institute of Certified Public Accountants in Ireland, and the Chartered Institute of Management Accountants which combine to represent over 50,000 professional regulated accountants in Ireland.