Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I welcome the witnesses. This Forum on Philanthropy and Fundraising document is an excellent one. It has busted a few myths for me and I am quite sad about some of the myths it has busted. We always had this impression that Ireland was the most giving nation in the world but the witnesses have outlined some very hard facts in regard to comparisons between ourselves and our closet neighbours. Some 15% of Irish donors give in a planned fashion compared to 36% of donors next door while the Irish figure in terms of percentage of disposable income is 0.8%, compared to 1.2%. The witnesses' analysis of high earners is stark. The top 400 earners in the country make up of 10% of charitable giving compared to 30% in the UK, Germany and the US. Corporations are worse. Only 1.4%, or €25 million, came from corporate donations in 2005, which is less than 0.1%, whereas in Britain, it was an average of 1.2% of their pre-tax profits. That is the standard.

I commend the witnesses on the views and proposals they have put forward, which merit further discussion. I will not have the time but I would like to go into a number of the taxation proposals in regard to charitable bodies and the hybrid rate of 33%. I will probably not get the chance but if I do, I will come back in later. I would like to talk about why the witnesses are here.

Any proposal that increases investment in philanthropy should be discussed and teased out. I have serious initial concerns about this proposal, which stems from the point of view that it is a fundamental change to the tax residency laws. We call these people tax exiles. They are Irish residents but they do not stay here for more than 182 per year and, therefore, they do not have to pay taxes on their global profits but only on their Irish interests profits. We know many of them and it has been reported in the media that they go to the limit. They will be here for 182 days per year, or 280 days over two years.

We saw an abuse of this system up to 2008. One of the proposals suggests increasing the number of days they can spend here in two consecutive years but the witnesses want to row back on the change made in 2009 when we got rid of the Cinderella clause where we had the jets taking off from Dublin Airport at 11.59 p.m. so that the day was not counted. I have serious concerns because it could lend to the view that we are selling tax residency. However, that is not to ditch the whole proposal and the concept.

The witnesses said there is a demand. The previous Government took in the domicile levy which would have had a lower threshold in terms of what people would have to contribute. The witnesses suggest a €5 million levy with no return for them on that €5 million. The domicile levy is €200,000, which can be written off against taxes on Irish interests. Only seven people paid the domicile levy in the last year for which we have figures. There are 11,307 people who made an income tax return in 2011 who have claimed they are non-tax resident. The pool of people to whom this could apply would be 11,307. We see with the domicile levy that it is very low.

The immigrant investor programme, on which the witnesses say this is modelled, is welcome in terms of bringing in new money but only nine people have signed up for it. I am not sure this will be the panacea and that is why I am concerned about it. If we only get four to seven people, there is an argument that it is money we never had, so let us grab it with both hands and invest it into social enterprises and philanthropy and try to keep the wheels moving as these to big projects start to wind down. However, there is another argument which is that some of these tax exiles have considerable interests in this State and some of them are very high profile and that to grant them additional days in this State is to facilitate their tax exile status. If they were to stay those extra days in the State, they would actually be taxed on their global profits, so they State would lose on out a lot of money.

I am not fully sure about taking the two steps the witnesses want, including increasing the number of days. The Cinderella clause takes it further because it will be an additional number of days because the day they fly off will not be counted. Currently, if they spend a minute in the State on a particular day, they are tax resident for that day. I am concerned about that.

The Department of Finance has done a review on tax exile status and the programme for Government commits that they will pay more. Did the witnesses look at the 183 days and going in reverse? For example, 163 days would apply but it would be 183 days if one made the €5 million levy and the €1 million contribution.

The witnesses acknowledged other issues which we would need to tease out in terms of where the investment would be in regard to the SMEs. The concept is good but it could be abused by a small number of people who would make huge gains as a result. Those are my views on that.

I refer to the other proposals in the document, including the proposal on the simplification of the Tax (Consolidation) Act and tax relief going to individuals. Will the witnesses talk through the proposals they have put forward? Proposal one is that it would all go to the charity. Proposals two and three are that the donor would keep it and so on. Why are those arguments being made?