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Dáil Éireann debate -
Thursday, 24 Oct 1996

Vol. 470 No. 6

Written Answers. - Taxation of Cross-Border Workers.

Cecilia Keaveney

Question:

34 Cecilia Keaveney asked the Minister for Finance the steps, if any, being taken to ensure equity for cross-Border workers; and if he will make a statement on the matter. [19655/96]

As the Deputies are aware, last year I established an interdepartmental committee to thoroughly investigate the issues involved in the taxation of cross-Border workers. I would like to remind the House of the main finding of this committee.

This committee found that the treatment of cross-Border workers for the purposes of income tax is fair and reasonablevis-á-vis other Irish taxpayers. Consequently, the committee felt that there is no justification for any special income tax treatment of these workers as compared to any other category of Irish resident taxpayers. The committee did however, make other recommendations, most notably, to exempt cross-Border workers from the health and employment and training levies. As the Deputies are no doubt aware, I announced such an exemption in this year's budget and this was introduced in this year's Social Welfare Act. The committee also recommended that cross-Border workers should avail of the direct debit system as a means of paying their Irish tax liability and this now applies for the preliminary tax payment due on 1 November 1996 and on 1 November of subsequent years. Full details of this system, including an explanatory leaflet are available from the Revenue Commissioners.
On the question of equity, it has been suggested that the Irish tax system should be used to equalise the differential in pay rates on both sides of the Border. However, it was never intended that the Irish tax system be used for this purpose. While income tax liabilities in this country are high, it is not true to say that cross-Border workers do not have tax equity, they do. They are treated the same for income tax purposes as any other resident taxpayer.
As part of its work the interdepartmental committee examined the application of the relevant provisions of the 1976 Irish British Double Taxation Agreement. It recommended that consideration should be given to the renegotiation of this treaty with a view to resolving differences of interpretation which exist at present.
Since the committee reported, the Revenue Commissioners have been in negotiations with their UK counterparts with a view to resolving the differences of interpretation which exist in the present treaty. However, as the negotiations are still ongoing it would be inappropriate for me to comment further on this matter.
I cannot overstress the fact that the issues involved in cross-Border taxation are complex, involving two jurisdictions, and the examination of these issues takes time. There are no easy solutions which will cater directly for the individuals affected while being fair to all the taxpayers involved i.e. both the cross-Border workers and all other Irish resident taxpayers.
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