"Evaluation of the Commission on Taxations Proposals"

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Table of Contents

1. Introduction3

1.1 The Income Tax Act3

1.2 The role of property taxation4

2. Background to taxation in Ireland4

2.2 The Commission on Taxation5

2.3 Double dividend theory6

3. Literature Review6

3.1 Property Tax6

3.1.1 Forms of Property Tax6

3.2 Carbon Tax7

3.2.1 Why A Carbon Tax?8

3.2.2 No Tax Increase? How?9

3.3 Water charges9

3.3.1 Water rates and RV rates11

3.3.2 The Dublin Statement11

4. Research Methodology12

References15

Evaluation of the Commission on Taxations Proposals

1. Introduction

Tax, a mere three letter word is capable and does bring about tension on faces of people. We come across quite a lot of people who prefer not to understand the term for the simple point that it is complicated. So it is necessary that we know what tax is, before getting into other things. In simple words or to say in a lay man's language, tax is nothing but the payment made by a person (individual, firm, company, trust, etc.) to a regulatory authority, i.e. the government. It could be either the central government or the state government. Tax is divided into two types - direct tax and indirect tax. Direct tax is the tax which is paid directly to the government; e.g. Municipal tax, Income tax, etc. Indirect tax is also tax paid, not directly, but indirectly. Some taxes are imposed for social and economic purpose e.g. The highest rates are imposed for the purpose of reducing very large incomes. Taxation has often been increased in order to reduce purchasing power to check the demand or has been reduced to stimulate demand.

1.1 The Income Tax Act

The Income Tax Act is not just framed to squeeze out money from people, which is unfortunately the common notion among many people, even today. It is formulated on certain principles based on which tax is levied. These principles are known as Cannons of Taxation. The Cannons of Taxation was first introduced by Adam Smith in the 18TH century in his famous work, Wealth of Nations. According to him, there are four cannons viz. equality, certainty, convenience and economy. But with the passage of time, the cannons increased which now includes elasticity, flexibility, simplicity and diversity.

1.2 The role of property taxation

The role of property taxation in financing local government in Ireland has contracted significantly in recent decades, property tax is clearly a fiscal tool aimed primarily at the raising of sustainable revenue to meet a range of specific expenditures. Property taxes existed previously in Ireland but due to the high number of exemptions only a very small proportion of households were taxed (Backhaus, 2002). OECD has stated that “Ireland has some of the most generous tax provisions for owner-occupied housing, largely because it is the only OECD country that allows a tax deduction for mortgage interest payments at the same time as not taxing property values, capital gains or imputed rent”. Given this statement, a move towards a property tax seems beneficial.

2. Background to taxation in Ireland

In November 2007, following a lengthy consultation procedure initiated in the wake of the Court of Justice ...