Minister Donohoe announces establishment of Commission on Taxation and Welfare

Commission will look at how best to support economic activity while ensuring sufficient resources available to meet costs of public services

The Minister for Finance, Paschal Donohoe, TD, has today (Monday) announced the establishment of the Commission on Taxation and Welfare, chaired by Professor Niamh Moloney.

As set out in the Programme for Government, the Commission of Taxation and Welfare is being established to independently consider how best the taxation and welfare systems can support economic activity and promote increased employment and prosperity. This is while ensuring that there are sufficient resources available to meet the costs of the public services and supports in the medium and longer term.

The Commission’s work will have regard to the principles of taxation and welfare policy outlined within the Programme for Government, including the Government’s commitment to a pro-enterprise policy framework, by providing a stable and sustainable regulatory and tax environment. It will also take account of issues such as, the impact of the Covid 19 emergency, aging demographics, digital disruption and automation and the long term strategic commitments of Government regarding health, housing, and climate.

Members will be appointed to the Commission in the coming weeks to bring the necessary expertise to fulfil the objectives of the Commission’s work from relevant areas including taxation, welfare, economics, legal and broader civil society.

The Commission is due to report to the Minister for Finance by 1 July 2022.

Commenting on the announcement Minister Donohoe said:

‘I am delighted today to announce the important work of the Commission on Taxation and Welfare will begin in the coming weeks. This independent work will ensure the sustainability of the public finances into the medium to longer term, and identify potential reforms to the tax and social welfare system so that the evolving needs of our society can continue to be met.I am particularly happy to appoint Professor Moloney to Chair the Commission. Professor Moloney’s considerable experience has greatly impressed me and will be put to good use on this seminal project.”

Minister for Social Protection Heather Humphreys commented:

‘I strongly believe that employment is not only the best route out of poverty but is also the best path to social inclusion in its fullest sense. I want to make sure that when people cannot work they have access to a strong social welfare safety net. However, I also want to make sure that they don’t get caught up in this net – that employment pays. For that to be the case the tax and welfare systems must work in a cohesive manner and maintain pace with changes in the nature of employment. I am very pleased therefore that the Commission on Taxation and Welfare is being established, I welcome the appointment of Professor Moloney and look forward to receiving the Commission’s recommendations in due course’.

Ends

Notes to Editor

Niamh Moloney, Biography

Niamh Moloney is Professor of Financial Markets Law and Head of the Department of Law at the London School of Economics and Political Science. She was elected a Fellow of the British Academy in summer 2018. Niamh specializes in EU financial market regulation and consumer financial protection and has written several books on these subjects. She has been a Visiting Professor in several leading Law Schools internationally, including Columbia Law School, New York and is a member of the Editorial Boards of a number of internationally-recognised journals.

Niamh is currently a Member of the Central Bank Commission and the Board of Appeal of the European Supervisory Authorities and has previously been a member of the Securities and Markets Stakeholder Group of the European Securities and Markets Authority, Chair of the Central Bank of Ireland's Consumer Advisory Group, and a Member of the UK Financial Conduct Authority's Financial Services Consumer Panel. Niamh has also acted as Special Adviser to the 2014-2015 inquiry by the UK House of Lords into the EU's regulatory response to the financial crisis, and as an Expert Witness for UK Parliament Select Committee Inquiries on financial market regulation and Brexit-related matters and for the European Parliament's Economic and Monetary Affairs Committee.

Niamh holds degrees from Harvard Law School and Trinity College Dublin.

Terms of Reference

As set out in the Programme for Government, the Commission of Taxation and Welfare is being established to independently consider how best the taxation and welfare systems can support economic activity and promote increased employment and prosperity, while ensuring that there are sufficient resources available to meet the costs of public services and supports in the medium and longer term.

The Commission’s work will have regard to the principles of taxation and welfare policy outlined within the Programme for Government, including the Government’s commitment to a pro-enterprise policy framework and to providing a stable and sustainable regulatory and tax environment. It will also take account of relevant issues such as the impact of the Covid-19 Emergency, ageing demographics, digital disruption and automation and the long term strategic commitments of Government regarding health, housing, and climate.

Towards this end the Commission is asked to:

Review how best the taxation and welfare system can support economic activity and income redistribution, whilst promoting increased employment and prosperity in a resilient inclusive and sustainable way and ensuring that there are sufficient resources available to meet the costs of public services and supports in the medium and longer term.
Examine what changes, if any, should be made to the social insurance system, including structure and benefits coverage, while ensuring sustainability. This will include consideration of the NESC report no 151 (November 2020) on the future of the Irish social welfare system and of output from the Pensions Commission regarding sustainability and eligibility issues in respect of State Pension arrangements. It will also include examination of how welfare policy can work in tandem with the taxation system to support economic activity, and while continuing to support those most vulnerable in our society in a fair and equitable way, having regard in particular to experience gained during the Covid-19 Emergency.
Examine how the taxation system can be used to help Ireland move to a low carbon economy as part of the process of meeting its climate change commitments as set out in the Climate Action and Low Carbon Development (Amendment) Bill 2021. This will include ensuring the sustainability of environmental tax revenue resulting from decarbonisation of the economy.
Consider the appropriate role for the taxation and welfare system, to include an examination of the merits of a Site Value Tax, in achieving housing policy objectives. This consideration should include reviewing the sustainability of such a role. It should also have regard to the experience of previous interventions in the housing and construction market and the current significant State supports for housing provision.
Consider how Ireland can maintain a clear, sustainable, and stable taxation policy as regards Ireland’s attractiveness to Foreign Direct Investment in a changing global taxation environment, including retention of the 12.5% corporation tax rate.
Review how best the taxation environment for SMEs and entrepreneurs can ensure that Ireland remains an attractive place to sustain and grow an existing business or to start and scale up a new business.
Review the adaptability of the taxation and welfare systems to the rise of digital disruption and automation and other technological changes.
Examine the process for reviewing taxation measures and expenditures in order to ensure it is aligned with best practice and where appropriate make recommendations as to how it can be improved.
Examine how effectively good public health is promoted in Ireland, and present relevant reforms to advance and incentivise this goal.
Consider taxation practices in other similar sized open economies in the OECD to see what lessons Ireland can learn from such counties. This will include consideration of 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. This will also include consideration of the potential for improvements in simplicity and administrative efficiency from integrating the taxation and welfare systems, as well as options for reform on the balance between the taxation of earned income, consumption, and wealth.
Submit its report to the Minister for Finance by no later than 1 July 2022.