The National Recovery Plan 2011-2014 has just been announced and is now available online
The Taxation Measures in the Plan are outlined on pages 89-103 of the document.
Page 89 lists the following ‘Key Messages’ of the Plan’s tax measures.
- Revenue measures will provide one third of the budgetary adjustment.
- 40% of total revenue measures will be adopted in 2011.
- The income tax system is unsustainable if 45% of tax units pay no income tax.
- Radical base broadening across the tax system is needed.
- All taxpayers must contribute.
- By overhauling tax expenditures, those that can afford to pay more will pay more.
- Tax policy emphasis must be on sustainable structural reform.
- Funding of local service provision must be addressed.
- The Government will maintain the 12½% rate of corporation tax.
- Supports for small and medium enterprises will be reformed.
The document proceeds to announce the following changes
Tax Credits and Bands
Tax credits and bands are to be cut by a total of 16.5% over the 4 years covered by the plan.
Pensions Tax Relief
- The rate of income tax relief on pension contributions will remain unchanged in 2011, but will be cut from 41% to 34% in 2012, to 27% in 2013 and 20% in 2014
- The existing PRSI and Health Levy relief on employee pension contributions will be abolished from 2011.
- The annual earnings cap for pension contributions eligible for relief will be cut from €150,000 to €115,000 in 2011.
A range of Tax reliefs and exemptions are to be abolished in 2011. These are:
- Tax exemption for patent royalties.
- The investment allowance for machinery and plant and for exploration expenditure.
- Approved Share Options Scheme.
- BIK exemption on employer provided childcare.
- The accelerated allowance for capital expenditure on farm buildings for pollution control.
- The tax exemption for payments to National Co-operative Farm Relief Services Ltd.
- Income tax relief for rent paid for private rented accommodation.37
- Income tax relief for trade union subscriptions.
- Income Tax Age Credit (phased over 4 years).
- Income Tax Age Exemptions (phased over 4 years)
The following measures will also be adopted:
- PRSI, Health and Income Levy charge will now apply to Approved Profit Sharing,Save-As-You-Earn,Unapproved Share Options and Share Awards Schemes.
- Artist’s exemption from Income Tax will now be restricted to €40,000 earnings.
- Ex-gratia termination and pension lump sum payments in excess of €200,000 will now be taxed.
The standard 21% rate of VAT will increase to 22% in 2013 and 23% in 2014.
A ‘Site Value Tax’ will be introduced in 2012, in the form of an interim fixed “household charge” of €100 per annum in 2012, and a full charge based on property value from 2013.
Carbon taxes will double over four years.
- The 25% rate of Capital Gains Tax will change to a new system in 2012, with differing rates for different levels of gains.
- The current tax-free thresholds for Capital Acquisitions Tax (CAT) are to be cut.
- Current reliefs and exemptions from CGT, CAT and Stamp Duty ‘will either be abolished or greatly restricted’.
- There will be no change in the 12½% rate of corporation tax.
- The Business Expansion Scheme(BES) is to be reformed.