Dáil debates

Wednesday, 22 May 2013

Ceisteanna - Questions - Priority Questions

Tax Reliefs Application

1:30 pm

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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2. To ask the Minister for Jobs, Enterprise and Innovation if he will detail the presentations that he has received calling for special provision to be made for senior executives in multinational companies; and if he will outline the business case developed by him to promote such special provisions. [24510/13]

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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The special assignee relief programme, SARP, is a tax concession for the temporary placement in Ireland of senior executives currently employed elsewhere by a multinational company. In essence, if we can attract the correct strategic senior executives to Ireland, he or she may bring hundreds more jobs.

The business case for SARP is to make it easier for companies to locate strategic leaders in Ireland for a short-term assignment in order to facilitate the establishment of job-creating opportunities in Ireland. Rapid and successful ramp up of projects frequently requires such assignments. It is regarded by the IDA as an important tool in attracting mobile investment and in facilitating its successful delivery of targets in Ireland.

In advance of budget 2012, I received representations from the independent enterprise development agencies - Forfás, IDA, Enterprise Ireland and Science Foundation Ireland - for improvements to SARP. As the Deputy will be aware, SARP was improved and streamlined in budget 2012. I received further similar representations from the enterprise development agencies for further improvements in advance of budget 2013. The pre-budget 2012 and 2013 submissions of a wide range of industry representative organisations, for example, IBEC and the American Chamber of Commerce, included recommendations to improve SARP. The CEO of the IDA has called for improvements to SARP in order to strengthen the tools Ireland uses to attract, retain and develop foreign direct investment.

The various pre-budget submissions received have called for improvements to the attractiveness of SARP. My pre-budget 2013 submission to the Minister for Finance called for a reduction in the personal tax rate under SARP from 35.7% to 30%. Technically, it was proposed that this would be achieved via a 23% income tax rate together with the 7% universal social charge. Such an improvement would strengthen the ability of Ireland's SARP to be used as a tool in attracting foreign direct investment.

The five-year lower personal tax rate under SARP is targeted at individuals currently working outside of Ireland. Many of the senior executives claiming tax relief under SARP would not have moved to Ireland if it were not for SARP. The costs of SARP are more than offset via the economic benefits. Many other jurisdictions against which Ireland competes for foreign direct investment have SARP-type personal tax incentives to attract senior executives. Ireland is in a jobs crisis and we must do whatever we can to attract and create jobs.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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The Minister is right. Ireland is in a jobs crisis and we must do everything we can to promote jobs. What we need to do is create sustainable competitive advantages so that we can compete with any other country in the world with regard to foreign direct investment.

However, on many occasions this Government has chosen the unsustainable competitive advantage route. The proposal for an income tax of 23% for those earning up to €500,000, is unsustainable in a number of ways. It is unsustainable with regard to low and middle income earners who are being taxed to the hilt in order to carry the weight of the economy. Ireland was mentioned in London last week and in Washington yesterday in the context of Google and Apple, respectively. The leadership of Apple under oath, said there are deals for major tax incentives between this Government and their company. These incentives are completely unsustainable. Instead of such companies being incentivised to develop jobs in this country they are setting up smaller units, pushing exports through those units and they are not properly paying taxes on those units.

Will the Minister come clean and say whether his Government has any tax incentive deals, whatsoever, with any multinational companies?

1:40 pm

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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The companies to which the Deputy refers, Google and Apple, between them employ more than 6,000 people in Ireland. These are real substantive companies providing significant employment and they are very competitive players.

I repeat what the Taoiseach, the Tánaiste and the Minister for Finance said: there are no special deals under our tax code with any company. This is categorically the truth. As the Deputy knows, our tax code is statute based. All the measures are enshrined in statute in the Finance Bill and are fully transparent. There are no special negotiated rates. I will not speculate as to the situation in the past but I suspect that in 1980, under export sales relief, there was a special sectoral scheme in the sense that exports did not attract tax at that stage. This may be what is being referred to.

I dispute absolutely the Deputy's suggestion that we are seeking to build companies that do not have sustainable competitive advantage in Ireland. Companies are in Ireland because of the talent, technology and track record. Indeed, the special assignee relief programme, SARP, is used in many countries to bring in strategic people who can build short-term projects which will result in long-term job creation. It is a completely acceptable approach.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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In Sinn Féin's view, in order to achieve a real, sustainable, competitive advantage, the cost of doing business must not be prohibitive. I refer to utility costs which are higher in Ireland than the average in the rest of Europe, such as waste management and water costs. There is a need to provide an educated society so we can attract jobs but funding is being pulled out of the education system. Broadband infrastructure is needed to allow companies to communicate. These elements are necessary to create long-term competitive advantages which will attract jobs to this country. Unfortunately, Ireland is regarded internationally as a tax haven by gaining competitive advantage in foreign direct investment on the basis of a very low tax base. Will the Minister give his views on the suggestion that Ireland's reputation has been damaged, as seen in the evidence given under oath by a senior Apple executive that a deal was done between his company and this State to confer tax advantages on his company?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I am surprised at the Deputy's remarks. I should not need to tell any Member of the Oireachtas that there are no deals in our tax regime. I am sure the Deputy was party to the debates on the Finance Bill. Our legislation is set out clearly. There are no special deals with any companies. Such special deals apply in some countries which are competitors of ours which spin their own tax deals for individual projects. It is the categoric truth that this never happens in Ireland. This country is categorically not a tax haven. Tax havens have been defined clearly by the OECD. Ireland is co-operating with the OECD in ensuring that there is not artificial movement of profits. There is an international study of how companies pay their taxes.

I am surprised the Deputy would take as gospel the word of some politician from another jurisdiction who accuses us of being a tax haven. That is not the case; Ireland is not a tax haven and never has been. I agree that we need sustainable competitive advantage. Last October, Sinn Féin talked about having a €13 billion spend. However, at budget time only a couple of months later, that had evaporated from its programme-----

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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That is not true. The troika acknowledged it and it is still our policy.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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The Sinn Féin path is not sustainable.