Dublin Chamber calls for Return to Work Tax Credit in Budget 2023 

+ Pre-Budget Submission also calls for 20% CGT rate for investors in Irish SMEs

+ And increased taxation for vacant land and properties 

20^th July 2022: Today business group Dublin Chamber submitted its recommendations for Budget 2023. 

Dublin Chamber believes the focus of Budget 2023 should be on investment in urban infrastructure and housing. Rather than increases in current spending, recent corporation tax “windfall gains” should be dedicated to a “rainy day” fund specifically earmarked to maintain medium/long term capital investment plans for cities, which provide the greatest return on investment.   

The Chamber’s four priority recommendations are:

1. Help more women back into the workforce through a Return to Work tax credit;
2. Provide investors in Irish SMEs a 20% Capital Gains Tax (CGT) rate;
3. Increase the tax of vacant land and properties; and 
4. Ringfence planned increases in carbon tax for sustainability measures.

Return to Work Credit 

Speaking as Dublin Chamber’s pre-budget submission was launched, Dublin Chamber Public Affairs Director, Aebhric Mc Gibney said “Government needs to boost the supply of local talent by helping more people return to the labour market. A Return to Work credit would overcome the disincentive faced by many couples where one person is working – if the second person returns to a full time job, they lose a lot of tax breaks and have to earn a lot of money before they break even.” 

Shares in Indigenous SMEs

“Firms will need to raise a significant amount of capital to deal with supply chain issues and to ride out the oncoming global economic downturn. Yet buying shares in local firms is currently treated the same, for capital tax purposes, as investing in a blue chip quoted stock,” continued Mc Gibney. “We’d like to see a lower rate of CGT for people who want to back local firms by investing in them.”

Ireland-UK Tax Comparison 2022 

€1.176 per £1 – 30/05/2022 (www.ft.com)	Ireland (Budget 22)	UK (Budget Spring 22)
Income Tax
Salary at which rate changes to 40% [1]  [€/£]	€36,800	€59,119
Effective total tax rate on dividends at higher rate	52%	39.35%
Different assessment for self-employed.	Yes – 3% USC levy on income over €100,000	No
Possible to defer income tax on share-options given to specific key employees	Yes – subject to restrictive conditions of KEEP	Yes
Capital Gains Tax
Standard rate	33%	20%
Entrepreneur relief – CGT rate	10% on gains on qualifying assets up to €1m	10% on gains on qualifying assets down to €1.1m
Effective rate first ~€1m on exit after five years	10%	10%
Capital gains tax rate on disposal of shares in SMEs	33%	10%
Capital gains tax rate on Employment and Investment Incentive Scheme qualifying investment or equivalent gains	33%	0%
Corporate Tax
Knowledge Development Box / Patent box income	6.25%	10%
Corporate Tax rate	12.50%	19%
R&D Tax Credit – upfront refunds for early stage/scaling companies	No	Yes
Capital gains tax business asset rollover relief	No	Yes
Value Added Tax
Standard Rate	23%	20%
Registration Threshold for SME providing services[2]	€37,500	€99,960

Housing

Low levels of housing and apartment construction over many years in Dublin have not kept pace with the growth in population. The accommodation shortage together with remote working trends is driving employment abroad. Aebhric Mc Gibney commented “Housing is our top priority. We need to see Government build more and penalise vacant sites where they are not being developed for housing.  We therefore propose an increase in the Zoned Land Tax and the introduction of a Vacant Property Tax.”

Climate 

Dublin Chamber also advised Government to maintain the increase in carbon tax as planned in Budget 2022 to help meet the targets outlined by the Climate Action Plan 2021.

Aebhric Mc Gibney said “The energy crisis has highlighted the importance of switching to indigenous, renewable energy systems and investing in the electricity grid to ensure that it is future proofed and has the capacity to meet decarbonisation targets.”

-ENDS-

Notes to Editor

Dublin Chamber Pre-Budget Submission

You can find Dublin Chamber's Submission on Budget 2023 here.

Dublin Chamber is the largest chamber of commerce in Ireland with over 1,300 member companies. It is the most broadly-based business group in the Greater Dublin Area, providing representation and networking services. Its policy work focuses on developing the Dublin region’s infrastructure & transport, promoting competitiveness & sustainability, and improving local governance. Dublin Chamber is also one of the oldest chambers of commerce in the world, tracing its origins back to 1782.

For further information please contact:
 Órla Mannion | Senior Public Affairs Executive | Dublin Chamber | orla@dublinchamber.ie

[1] In the UK, the 40% rate comes into effect on income from £50,271 - £150,000, over £150,000 45% tax rate.

^[2] The threshold for the registration of VAT in the UK is £85,000.