The Irish Tax Institute has broadly welcomed the measures announced in Budget 2023 today.
Speaking today, Irish Tax Institute President Colm Browne said: “Minister Donohoe’s decision to raise the entry point to the higher rate of income tax rewards middle-income earners who have shouldered more than their fair share of the burden of our highly progressive tax system over recent years. This change, along with the cost-of-living package of measures, will help this group of taxpayers in the current uncertain inflationary environment.”
Mr Browne added that the changes to the tax bands and the increases in the income tax credits will strengthen Ireland’s position among competitor countries: “With the implementation of the agreed global minimum corporate rate of 15% in prospect, the focus of international investors will turn to personal tax regimes and the cost of employment as they make decisions about where to locate their businesses.”
Mr Browne said, with very little movement in personal tax (income tax, USC and PRSI) rates over the last decade, effective personal tax rates in Ireland, at average salaries and above, had grown high by international standards. Irish workers in this cohort were paying more tax on their earnings than their counterparts in the UK, Switzerland, and the USA.
“Today’s Budget goes a long way towards redressing that balance. By reducing the effective tax rate for workers on average salaries, the Minister has incentivised work and made our personal tax system more competitive internationally. This decision will benefit our economy as well as close to 745,000 taxpayers,” said the President.
The Institute also welcomed the Budget measures to support businesses struggling with spiralling energy bills. “Input costs, including labour costs, have increased sharply for business over the past 12 months and many SMEs will soon begin to repay the tax debt they warehoused during the pandemic. The support provided in the Budget will help them to pay the ballooning energy bills they now face in this latest period of crisis.”
Mr Browne said Institute members will work with Revenue, as they had done during the Covid crisis, to ensure the Temporary Business Energy Support Scheme announced in the Budget operates effectively to protect jobs and enable eligible businesses to continue their post-pandemic recovery.
“We also welcome the extension of key reliefs for business. The Minister’s announcement that he will bring forward changes to the R&D Tax Credit and the Key Employee Engagement Programme is of particular interest and we look forward to seeing the details,” added the President.
The Institute said the Government’s decision to use once-off measures to provide much needed support to people during the current crisis was prudent and fiscally sustainable.
Further information on Budget 2023 is available on our dedicated webpage.