The Gazette 1988

GAZETTE

DECEMBER 1988

In addition, legal services are a necessity wh i ch attach the same rate of VAT as luxuries. As a step in the preparation for h a r mo n i s a t i on in 1992, it is submitted that the rate of VAT on services be reduced from 2 5% to 15%. 5. Income Tax (a) Apart from higher wages, one of t he g r eat i n c e n t i v es attracting younger people to the U.K. and U.S.A. is the lower rate of income tax wh i ch ensures that they have more spendable income. The high rates of Irish Income Tax are n o t o r i o us and may constitute an incentive for tax evasion. It is submitted that, as a first step towards the harmonisation of taxes, the rates of Income Tax should be reduced to 3 0%, 4 0% and 5 0% w i th further reductions in subsequent years until we match, if not better, our nearest neighbour. Such re- d u c t i o ns w o u l d have a beneficial effect on employ- ment and increase the tax yield in other areas. (b) Bearing in mind that the majority of self-employed pro- fessional persons in non- pensionable employment do not s t a rt to p r ov i de f or retirement until they are over 40, it is submitted that the limit on Retirement Relief, 1 5%, be i n c r e a s ed and structured according to the age of the taxpayer. This wou ld have the added advan- tage to the Exchequer that the taxpayer would be unlikely to require State assistance for any reason, in later years. (c) Consistent w i th the special position of the Family under the Constitution and in order t o a s s i st p a r e n ts w i t h children, it is submitted that Children's Allowances be re- introduced at a realistic figure. 6. Income Tax/Corporation Tax The Government, some years ago, stated that they wou ld issue a Government Fund to persuade e x p o r t c omp a n i es to keep accumulated reserves in Ireland. It is submi t t ed that this proposal be now implemented and a new ECU Bond be issued, the income of

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(ii) Frequently relatives take on the obligation of looking after an elderly, h a n d i c a p p ed or in- capacitated person and devote so much time to the care of that relative that they are incapable of earning a living. In the event of the relative making a gift or be- queathing property to the person caring for him or her, the receiver wou ld find it difficult to pay t he t ax on t he property received, pro- perty wh i ch the giver thought wou ld be some reward for the care and devotion shown. (iii) Elderly pe r sons w h o looked after relatives, not necessarily children, and who assumed a du ty of care to the younger person wou ld be penalised and wou ld be unab le to ma ke sa t i s f ac t o ry provision for him or her. the 5% rate in the 1988 Budget, the level of Stamp Duty is much higher than in the U.K. The high level of this duty is the greatest single obstacle to the freeing of the housing market, particularly in t he l ow c o st area. Any concession in the low cost area, in respect of Stamp Duty, will help to overcome d i s t o r t i on in t he hous i ng market due to the former high level of housing subsidies. It is submitted that there be a two-tier rate of Stamp Duty on secondhand houses of 3% up to £ 4 0 , 0 00 and of 4% thereafter. It is visualised that sales of plots of land could attract Stamp Duty at the higher rate. The potential loss arising out of the introduction of these lower rates could be overcome by buoyancy in the property market, resulting in increased income. It is submitted that some f o rm of relief be g i v en in s u ch circumstances - Sec. 4 4 is not sufficient and is rarely, if ever, used. 3. Stamp Duty (a) Despite the introduction of

ne c e s s a r y, is suggested that a new (1%) low rate on new housing be introduced w i th an exemption for the " I nner C i t y ". The practical advantage of such an arrangement from the Revenue point of view will be that many of the problems of a d j u d i c a t i on on n ew houses wou ld be removed, such as the ques t i on of whether roofs are on or off or whether there is a single contract covering the site and the building or t wo separate contracts. In general, provided it was at a low level, Stamp Duty on new houses wou ld lower the compliance costs as far as the Revenue are concerned and it wou ld make building-work and the programming of it easier for developers and builders. In addition agents wou ld need to spend less t i me d e v i s i ng s u i t a b le marketing packages, (d) The State is putting itself forward as a suitable location for c omp a n i es s u p p l y i ng Financial Services. A serious obstacle is the present rate of stamp duty on transfers of shares (1%) in comparison w i t h 1 / 2 % in th U.K. and Ca p i t al Du t y of 1% in comparison to the U.K. rate of Nil. The U.K. rates should be, at least, matched. The lost return in revenue because of t he r e l a x a t i on s u g g e s t ed w o u l d be r e p l a c ed by increased income tax and other taxes, (d) It is submitted that the relief provided by Sec. 93 F.A. 1982 and since w i t hd r awn be re- introduced so as to encourage elderly farmers to retire and pass the land on to the next generation, (d) It is submitted that the Stamp Duty bands be index-linked in the same way as submitted for C.A.T. 4. V.A.T. Services wh i ch formerly might have been p r o v i d ed by Irish Solicitors are not now sought in view of the disparity be tween the U.K. (15%) rate and the Irish ( 25%) rate. t h en it

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