At lunchtime on Wednesday the American Chamber of Commerce Ireland published its pre-budget submission calling on the Government to prioritise income tax cuts in the budget despite the threat of Brexit.
Just two hours later, Minister for Finance Paschal Donohoe made it clear on the steps of Government Buildings that Budget 2020 would be framed in the context of a no-deal Brexit, dashing hopes for major tax cuts.
In any event, with budgetary headroom of just €700 million, a giveaway budget was never on the cards.
The chamber’s call for cuts in personal taxes is not a new one nor is it surprising. Its membership is predominantly made up of multinational employers, who divert considerable resources each year to finding ways to (legally) minimise their tax bills.
“A competitive personal tax regime is an important deciding factor for global talent who can choose where they wish to locate to develop their career,” the chamber argued, adding that its members continue to cite high marginal income tax rate as a “dissuasive factor”in attracting and retaining staff.
Sarp
Our rising population – driven by immigration – and data around the use of the Special Assignee Relief Programme (Sarp) incentive programme are evidence to the contrary.
Four individuals saved €1 million each or more in their tax bills in 2016, according to Revenue figures on Sarp, which was introduced in 2012 as a means of attracting senior executives here.
It provides a relief of 30 per cent on all income above €75,000 with €18 million in tax foregone to the exchequer in 2016. The scheme is due to close in 2020 and not surprisingly the American Chamber wants it extended, and has urged the Government to carry out an assessment as to whether the “threshold of €75,000 renders the Irish regime uncompetitive by comparison with other countries”.
With tens of thousands of jobs in the Irish economy potentially at risk from a no-deal Brexit, it’s hard to imagine Paschal Donohoe prioritising the needs of well-paid foreign executives over those at the other end of the pay spectrum.
