The Taoiseach has dismissed a proposal by Cabinet colleague Mary Mitchell O’Connor for a 30 per cent tax rate for returning emigrant graduates.

Enda Kenny was replying to Fianna Fáil leader Micheál Martin, who asked if he accepted the Minister for Jobs, Enterprise and Innovation's proposal, was "unfair and discriminatory''.

Mr Kenny replied: "Yes, I do.'' The Taoiseach said it would be "unfair and discriminatory, of course'' if a returning emigrant paid a different rate of tax simply because they had come back to live in Ireland.

Mr Martin said it beggared belief such a proposal could be put forward, adding graduates were thinking about "who came up with this bananas idea''.

Ms O’Connor, in a pre-budget submission, suggested the preferential tax rate would apply to those earning in excess of €75,000.

Mr Martin said there was a lot of anger over how such an “out-of-touch proposal” could get to the stage where a Minister essentially announced it.

Punished

Anybody who stayed in Ireland would effectively be punished by the proposal, said Mr Martin.

“In essence, anybody who stayed with it in Ireland, committed to a house, mortgage, is a graduate and stayed the pace here will be paying up to a 50 per cent marginal rate of tax on salaries of more than €33,500, whereas somebody coming back will only be paying an effective rate of 30 per cent,’’ he added.

Mr Martin said the Government could not restrict the concession solely to Irish graduates and, presumably, it would also apply to European graduates.

“That would mean that Europeans would be on a 30 per cent tax rate at the same IT desk or place of employment as the person who graduated, worked and stayed in Ireland . . . who would be on about 50 per cent,’’ he added.

Mr Martin said it was clear construction workers on similar earnings need not apply.

Childcare

He also said one graduate had said to him people on the Government side, and other sources, had been questioning calls for investment in education and childcare.

“This type of investment is the most effective way of dealing with medium and long-term issues with a skilled workforce,’’ he added.

“We need to invest in these areas rather than having resources spent in such a discriminatory manner, with dubious outcomes in terms of the objective.’’

Mr Kenny said no decision had been made by the Cabinet on such issues.

“We want to present a budget that is as fair as possible,’’ he added.

He said more than two million people were working, which was the highest number since 2009.

“That is important and, while the economy is improving, it still has a long way to go,’’ he added.

“In terms of fairness, it is important that we introduce paternity leave, which has been applicable since September, and a second preschool year is in operation for everybody.’’

Emigrants were coming home, said Mr Kenny, and it was important, therefore, the supply of housing was dealt with and people were provided with chances to secure housing at affordable prices.