Oireachtas Joint and Select Committees

Tuesday, 16 November 2021

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach

Finance Bill 2021: Committee Stage

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I will deal with the issues relating to SARP put by Deputy Boyd Barrett. I will begin by describing the schemes in place in other countries. France has an inpatriate allowance which offers a reduction of between 30% and 50% of the remuneration of individuals on the scheme. Malta has a highly qualified persons scheme that offers a 15% flat rate of tax on all employment income. The Netherlands has a scheme that offers a 30% tax free allowance. Italy has a scheme, introduced in 2017, that provides 50% relief. That scheme was strengthened in 2019 to provide regional incentives. Portugal has a scheme which offers a 30% reduction in income tax rates for relevant individuals.

That is the essential context for this argument. Other countries we compete with for jobs and investment have equivalent schemes. It comes back to the argument and debate we had on other matters concerning doing things that can raise questions but which we do because they are part of what allows our country to be competitive and play a valuable role in attracting certain senior decision-makers here to particular companies, which is fundamental to the creation and retention of other jobs. Consider the list I have read out. If we get rid of this scheme, it makes what we offer uncompetitive versus the offerings that are there.

I have no doubt, despite the enviable consistency of Deputy Boyd Barrett's views and for which I have long praised him, that were any job losses to develop in any of those employers, one of the first people to herald this as the collapse of an economic model would be the Deputy and, no doubt, he would criticise me for it. I hope his consistency of argument would last at that point but I am not willing to take the risk.

The scheme can attract understandable criticism, as it has from the Deputy, but my Department and I go to great lengths to publish information about the scheme on or just after budget day every year. I take the Deputy's point that, when a scheme confers benefits on people who are already very well paid, there is an additional responsibility on me to make sure it is done in an open and transparent way. That is why, every year, my Department publishes a report on the operation of the scheme.

The Deputy will remember that a couple of Finance Acts ago, I made changes to the operation of the scheme because, even though it plays a role in retaining and attracting certain kinds of jobs, it should not be done with a disregard to any concerns about equity. I made changes to the scheme at that point because I wanted to deal with some issues I was becoming concerned about and that needed rectification. The most recent report that was published indicates there were 379 additional employees, compared with 236 in 2018.

The number of employees retained was 483 compared with 348 the year before. This combined total of 862 SARP-related jobs in 2019 represented a cost of €44,000 per job created or retained, a decrease in cost per job compared with 2018 when there were 584 at an average cost of €73,000 each. This represents a decrease in cost of over 39%. I know it can be complex, at times, to make a case for a scheme like this but it does have a role to play in jobs, corporation tax receipts, PAYE receipts and the association of research and development tax credits here in Ireland because of the individuals who are here. I remind the committee that in 2019 I commissioned an independent review of the scheme. It said there was a strong policy rationale for the scheme. One of the main reasons for that is the existence of comparable schemes in other jurisdictions and the role this scheme plays in allowing us to be competitive versus those.

Comments

No comments

Log in or join to post a public comment.