Dublin Chamber has urged finance minister Paschal Donohoe to introduce a Return to Work tax credit in Budget 2023.

Dublin Chamber is the largest chamber of commerce in Ireland with over 1,300 member companies.

In the organisation’s pre-budget submission, 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,” he stated.

Mc Gibney explained that as the Irish economy continues to experience housing supply pressures, limiting the options for migrant workers, policies that reduce labour participation by second earners should be given renewed analysis.

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"For example, further increases to the Home Carer Credit, as outlined in the Programme for Government, risk undermining labour market activation," he said.

"The attractiveness of returning to work, even at the higher salary levels generally commanded by skilled employees, is weakened by the structure of the tax system and the low level of state support for childcare costs currently available.

"Dublin Chamber recommends the introduction of a Returning to Work credit of, say €5,000, for second earners taking up employment. Its operation would need to be coordinated with the Home Carer Credit and it could be tapered to be withdrawn over a five-year period after taking up employment. The measure itself could be withdrawn as the labour force participation gap diminishes."

The Chamber’s four priority recommendations are:

+ Help more women back into the workforce through a Return to Work tax credit

+ Provide investors in Irish SMEs a 20% Capital Gains Tax rate

+ Increase the tax of vacant land and properties

+ Ringfence planned increases in carbon tax for sustainability measures.

In relation to SME funding, Mc Gibney said that businesses will need to raise a significant amount of capital to deal with supply chain issues and to ride out the oncoming global economic downturn.

“Buying shares in local firms is currently treated the same, for capital tax purposes, as investing in a blue chip quoted stock,” he said. “We’d like to see a lower rate of CGT for people who want to back local firms by investing in them.”

The chamber contends that the accommodation shortage together with remote working trends is driving employment abroad.

“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."

+ Download the Dublin Chamber pre-budget submission here.