Irish task force says taxes must rise to fund major fiscal challenges

DUBLIN (Reuters) - Ireland will have to increase the level of taxation on people and businesses over time to meet public service demands and major fiscal sustainability challenges, a government-appointed commission said on Wednesday.

The Commission on Taxation, whose recommendations are not binding, said it was necessary to broaden the tax base and that the balance of taxation needed to shift away from taxes on labour towards taxes on capital, wealth and consumption.

It called for the yield from taxes on land and property to be increased materially and for substantial increases on capital gains tax and capital acquisitions tax. New taxes such as road usage charges would also be needed as the yield from taxes on fossil fuels declines, it said.

"Given Ireland's demographic profile, level of public debt, and a number of other fiscal risks, it is inevitable that the total amount of taxation required to fund public services will increase in the years ahead," the commission's report said.

Other risks listed included the "considerable uncertainty" about the future yield of the corporation tax that Ireland mostly collects from large multinational firms and the public funds that will be needed to address climate change.

The commission's chair, London School of Economics Professor Niamh Moloney, said the panel was conscious of the economic challenges facing households hit my soaring inflation and that many of its recommendations may be challenging in the short term.

Finance Minister Paschal Donohoe said the report posed serious questions as to how Ireland reforms its taxation and welfare systems "over the longer term."

The government has pledged to cut taxes as part of its annual budget, to be announced on Sept. 27, aimed at helping consumers and businesses contend with soaring energy prices.

(Reporting by Padraic Halpin; Editing by Leslie Adler)