Capital Taxes are analysed under the category of wealth taxes by the Commission encompassing CGT, CAT and Wealth Tax. The only tax that in the eyes of the Commission merits a tweak is CGT with a recommendation for the re-introduction of indexation relief and Roll Over Relief for farmers where the gain arises from a CPO gain.

A key finding of the report in respect of CGT is that gains attributable to inflation should be excluded from the charge to CGT by the reintroduction of indexation relief. Alternatively a form of tapering relief is suggested which would relate the CGT charge to the period of ownership of the asset from which the gain arises. The longer the period of ownership, the lower the CGT charge. However, the Report also points out that reintroducing indexation and achieving a revenue neutral outcome could involve an increase in the rate of capital gains tax in these Exchequer cash strapped times.

The Report takes a look at Roll Over Relief which was abolished in FA 2003. The Commission advocates the re-introduction of the relief in respect of gains on disposals of farm land pursuant to a compulsory purchase order where the proceeds are re-invested in farm land.

The case for introducing additional CAT rates was explored but the Commission concluded that such a measure was not necessary because the application of exemption thresholds for CAT means that there is already some progressivity in CAT.

Wealth tax was also considered but the Report recognized that fact that Wealth taxes can have a negative influence on entrepreneurship and are costly to administer yielding little revenue for the Exchequer. The Commission therefore did not pursue a recommendation for the introduction of such a tax.