The draft Programme for Government was published on Monday 15 June following agreement by Fine Gael, Fianna Fáil and the Green Party party leaders. Taxation highlights focus on supporting the SME sector, job retention and creation, and Foreign Direct Investment (FDI).

With a deficit of €30 billion estimated for the end of the year, the draft Programme for Government enlists taxation measures to close the deficit. However, any tax rises will be based on so called negative externalities such as carbon tax, sugar tax, plastics, etc.

Highlights for the SME sector and small businesses:

• The July Stimulus package proposes to introduce a new €2 billion Credit Guarantee Scheme, SURE scheme and the warehousing of tax liabilities.
• Assurances that the tax system will remain supportive of the SME sector and a promise to maintain Ireland’s attractiveness for businesses to start and scale up.
• A review of capital gains tax measures in each Budget over the next five years, with a view to supporting innovation driven enterprise, assisting in the transition to a low carbon economy.
• Support for greater up-take of the R&D tax credit by small domestic companies, with a commitment to examine issues with respect to the preapproval procedures and reduce record-keeping requirements.

Job retention and creation highlights include:

• The July Stimulus package will consider the future implementation of the Temporary Wage Subsidy (TWS) and the future distribution of the pandemic unemployment payment (PUP).
• A Commission on welfare and taxation is to be established to independently consider how the tax and welfare systems can support economic activity and promote increased employment.

Corporation tax measures include:

• A commitment to the 12.5% tax rate.
• Recognition of taxation as a national competence.
• Continued constructive engagement on international tax reform through the OECD.
• Continued implementation of the Roadmap on corporate tax reform.
• Recognition of the need for taxation to reflect changes in the digital economy, in line with the OECD.

Income tax proposals include:

• A commitment to maintain income tax and USC rates, and no changes to income tax credits or bands in Budget 2021.
• From Budget 2022 onward, where incomes are rising again, income tax credits and bands will be indexed linked to earnings.
• Equalisation of the earned income tax credit and the employee tax credit.
• Improvements to the “unfair” 3% self-employed USC charge.
• Support of stay-at-home parents through an increase to the home carer tax credit in line with increases to subsidies for childcare.

Other tax proposals within the draft Programme for Government are:

• An annual increase in carbon tax of €7.50, until Budget 2029 and an increase of €6.50 in 2030.
• Carbon tax receipts will be partially utilised in retrofitting homes and incentivising farmers to farm in a greener, more sustainable way.
• An examination of changes to the tax system to encourage the efficient use of resources.
• Local property tax legislation will be brought forward, and new homes will be brought into the tax system.
• A targeted tax regime to discourage ‘vaping’ and e-cigarettes.
• An examination of the merits towards changing tax arrangements to encourage remote working.
• Further consideration of tax measures to manage evolving issues in the dairy sector, such as market volatility.
• Ensuring the tax system remains supportive and attractive to film and media production.