Below is a summary of the fiscal strategy to be pursued by Fine Gael and Labour in their programme for government 2011 – 2016. Click here for the full text of the Programme for Government.
“As part of our fiscal strategy the new Government will:
• Keep the corporate tax rate at 12.5%;
• Maintain the current rates of income tax together with bands and credits. We will not
increase the top marginal rates of taxes on income. We will reduce, cap or abolish
property tax reliefs and other tax shelters which benefit very high income earners. We
will also ensure the implementation of a minimum effective tax rate of 30% for very
high earners;
• Consider, arising from the previous Government’s deal with the IMF, various options
for a site valuation tax. Any site valuation tax must take into account the significant
number of households in mortgage distress and provide local government with a
reliable stream of revenue;
• We will limit the top rate of VAT to 23%;
• There will be no increase in the standard 10.75% rate of employers PRSI;
• We will review the Universal Social Charge;
• We will ensure that tax exiles make a fair contribution to the Exchequer;
• Re-prioritise capital funding for smaller projects that deal with specific immediate
problems. Smaller projects are more labour intensive and more likely to be carried out
by local contractors increasing short-run domestic economic impact. Investment
priorities will include education, health and science and technology;
• Undertake a full review of the Hunt and OECD reports into third level funding before
end of 2011. Our goal is to introduce a funding system that will provide third level
institutions with reliable funding but does not impact access for students;
• Bring in a range of measures to tackle the problem of welfare fraud. As part of this we
will create a new “one-stop shop” Payments and Entitlements Service to process all
major welfare and other entitlements;
• To achieve better quality water and environment we will introduce a fair funding
model to deliver clean and reliable water. We will first establish a new State owned
water utility company to take over responsibility from the separate local authorities for
Ireland’s water infrastructure and to drive new investment. The objective is to install
water meters in every household in Ireland and move to a charging system that is
based on use above the free allowance;
• Conduct a Comprehensive Spending Review to examine all areas of public spending
and to assess effectiveness of spending programmes and value for company;
• Establish a Tax and Social Welfare Commission to examine entitlements of self
employed and the elimination of disincentives to employment.