Taxation Tax Policies and Income Taxes - Research Paper Example

IRISH TAXATION al Affiliation) Introduction The Irish budget provides international tax strategies through its policy statements. The Minister of Finance announced the 2015 budget on the 14th day of October 2014. The announcements included the tax measures meant to encourage both local and foreign investors in the country. Their aim is to maintain Ireland’s competitiveness as a country that aims at achieving a favorable balance of payments. The tax measures include the Tobacco Products Tax that is under the Value Added Tax (VAT), the Double Irish Structure that is under Corporation Tax, and the Standard Rated Reliefs that is under the Income Tax (Doyle, 2010). This paper assesses the extent to which these tax measures are equitable. It also argues the ease of implementation of the measures. In addition, it discusses the societal and economic impact of the tax measures on the growth and development of Ireland. Discussion VAT: Tobacco Products Tax The budget states that the rates of tax for tobacco products will increase to 40 cents. This is inclusive of VAT and applies to the packet that has 20 cigarettes. The increase is in the popular category of prices and the VAT on other tobacco products to increase on a pro rata basis. The packet that weighs 25 grams will have an increase of 20 cents that is an inclusive figure of the VAT. This measure will increase the minimum rate of the Tobacco Products Rate. This tax measure has significant implications to the Irish government. The increase in tobacco taxes is an effective measure to ensure the reduction of tobacco use. This results in a decrease of the number of deaths due to the excessive use of tobacco (Cremins & Brien, 2005). From this perspective, the increase in taxes could be an equitable measure for the societal concerns. This is also evident in that the Irish government would use the revenues from such taxation to increase awareness of the negative effects of excessive use of tobacco. However, the increase is not an equitable measure of the tobacco users. It could lead to an increase in the use of illicit tobacco products due to the inability to afford legit products. The implementation of the tax measures would depend on the effectiveness of the taxation systems in Ireland. The market for the products could be hesitant to buy the products, as they will be expensive. This would decrease the revenue accrued from the purchase of the products. The country needs to develop comprehensive taxation systems that monitor the rates of tobacco taxation from the manufacturer to the retailer. The Irish government could have challenges in the determination of which prices to assess. This is in relation to the raw materials or the finished products. The cost of implementation of an effective taxation system could be high, therefore, affecting its viability. The tax measure has several effects to the society and the Irish economy. To begin with, the rates of corruption in the country could increase. This is due to the business strategies that could aim at the avoidance and evasion of taxation. Some of the personnel at the taxation authority could ease the procedure of ensuring taxation compliance in relation to tobacco products. There could be negative impacts on the Irish society because of the increase in taxation. This could occur through the illegal production of counterfeit products that could lead to numerous health effects. However, considerable penalties for the lawbreakers could ensure the effectiveness of the system. Double Irish Structure The 2015 budget aims at achieving maximum collection of revenue from corporate tax. The Irish government would ensure the collection of revenue from overseas corporations. It would place emphasis on companies in the technology sector. Initially, the taxation system incorporated a tax-optimized structure that did not require registered corporations to tax residents in the country. In the 2015 budget, such as system, known as the ‘Double Irish System’ would seize to exist. It would require that the registered companies in Ireland become tax residents of the country. This ensures that the taxation of the corporations occurs according to the local taxation policies. The measure to eliminate the Double Irish Structure is equitable in terms of the support it gained from international institutions. For instance, the European Union showed its optimism in the determination and implementation of the changes in corporate taxation. The organization would support Ireland through the formulation of a system that aims at pressurizing companies to pursue and adapt the new taxation system. This is because the implementation of a system that ensures taxation according to the local policies would ensure Irish Economic Development and Cooperation (Berube, 2010). International organizations are against tax frauds. They would ensure the implementation of an equitable taxation system. It could be easy to implement the system that requires international corporations to become Irish tax residents. This is because the country would not increase the corporation tax that is currently at 12.5 percent. This means that international corporations would have the perspective that the business environment still favors their operations. In addition to other strategies, the government of Ireland would ensure the creation of systems that encourage the companies to conduct their business in the country. It would also ensure tax incentives for companies that agree to become tax residents of the country (Brennan & Moore, 2002). The system has economic and societal impacts to Ireland. Most international companies could restructure their business operations to fit the policies of the new system. This could mean an increase in the tax procedures that eventually become costly to most of the corporations. Some of the companies could withdraw their services from the country, meaning a decrease in foreign exchange. In the society, some of the organizations involved in community work could reduce the amount of funding for community projects. This influences the society negatively because such projects are beneficial to the residents, especially through the creation of employment. Standard Rated Reliefs There is an introduction of Relief for Water Charges. This is at the rate of 20% on the annual payment made in relation to water charges in the previous year. However, this is subject to the maximum relief of one hundred euros per household. This measure aims to benefit 653000 households through water subsidy grants for the recipients of the household beneficiaries (Budget 2015). The tax measure is equitable to the households due to the ease of water access to households. Setting up the measure would encourage the investment network. This becomes equitable for the development companies in the water sector. The government is also determined to benefit from the measure, as a raising income tax is not beneficial as compared to an increase in water charges. The implementation of this taxation measure would not be easy. There is a need for approval from the European Union on the implementation of the measure. The European commission is in the process of examining the terms of the policy in relation to the water charges. However, the institution only requires the Ireland government to pass the market test on the need of increasing the water charges and giving relief to households. The government of Ireland has confidence in the success of the changes in the water charges relief. This is due to the effective system that it has designed to be able to meet the requirements provided by the European Union. The society will benefit from the initiative as the relief considers the public concerns on water issues. The utility invests in a network of households that gives the relevance of the relief on water. The investment of the government on the supply of water is viable due to the decrease of taxes on the households. It also encourages the creation of employment through the various investors who are willing and have the ability to invest in the supply of water. For the economic benefits, Ireland would benefit due to the increase in revenues. This is because more households would register for water connection due to the introduction of the relief. There will be a sustainable water network in support of the availability of the resource in a broad base of households. Conclusion Taxation is inevitable and necessary for all countries. The Irish government through the 2015 budget developed measures that could ensure the growth of the country. This would occur through the formulation of strategies that encourage the operations of businesses for both the locals and the foreigners in the country. The Tobacco Products Tax aims at the reduction of tobacco use, as the tax increases. However, this would encourage the negative production of counterfeit products. This could lead to less sales of tobacco that could result in a decrease in the government revenue (Budget 2015). Another measure is the elimination of the Double Irish Structure. This would ensure the registration of international corporations as tax residents and becomes subject to the taxation laws of the country. This could lead to the possibility of withdrawal of some of the corporations’ operations in the country that could have a negative impact in the Irish economy. Finally, the relief on water charges could encourage the supply of water in most households due to the decrease in income taxes. This would lead to an increase in revenue for the government. References Berube, W. 2010. Taxation, tax policies and income taxes. New York: Nova Science. Brennan, F., & Moore, P. 2002. Corporation tax. Dublin: Institute of Taxation in Ireland. Budget 2015. (n.d.). Retrieved November 22, 2014, from http://www.budget.gov.ie/Budgets/2015/2015.aspx Cremins, D., & Brien, D. 2005. Value added tax (4th ed.). Dublin: Institute of Taxation in Ireland. Doyle, G. 2010. Irish taxation - law and practice [2010/2011] (8th ed.). Dublin: Irish Taxation Institute. Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Read More