Earlier this week, the Minister for Finance, Paschal Donohoe, TD, updated Cabinet on the end of March expenditure position. Overall gross expenditure by Departments was €19.5 billion, 14.5% higher than expenditure for the same period last year. In total, €12 billion more was spent by the Department of Social Protection in the twelve months to end-March 2021 than over the previous 12 months.
In this context and with the economic impacts of the COVID-19 pandemic likely to be long lasting, it perhaps makes the establishment of a new Commission on Taxation and Welfare even more timely than when it was first signalled in the Programme for Government last July.
The Commission will be chaired by Prof Niamh Moloney, Professor of Financial Markets Law and Head of Department of Law at London School of Economics. Through comparison of other similar sized OECD countries, it will independently consider how best the taxation and welfare systems can support economic activity, while ensuring there are sufficient resources available to meet the costs of public services and supports in the medium and longer term.
Due consideration will be given to the Government’s pro-enterprise policy framework, the impact of the COVID-19 emergency, aging demographics, digital disruption and automation. The Commission will examine what changes, if any, should be made to the social insurance system, including structure and benefits coverage. How the taxation system might be used to help Ireland move towards a low carbon economy will also be investigated.
Another consideration will be how the tax administration system should be modernised, building on real time payroll reporting, which underpinned the existing modernisation of the PAYE system, and ensuring that the tax administration system meets best international standards.
The Commission is set to report to the Minister for Finance by July 2022.