Dáil Éireann Debate, Wednesday - 5 November 2014
8. Deputy Joe Higgins asked the Minister for Finance the number of persons that will benefit from the changes to the special assignee relief programme, including the scrapping of the ceiling of €500,000, the reduction in the amount of time for which a person must have been employed by a company, and the withdrawal of the requirement not to be tax-resident in another country; and the cost to the Exchequer of these changes. [41749/14]
View answerMy question relates to the special assignee relief programme, SARP. What effect, in terms of massive benefits, will the further generous concessions the Minister provides in the Finance Bill have for highly paid individuals?
As the Deputy will appreciate, predicting the cost and take-up of any new tax measure is difficult. When SARP was introduced in 2012, it was estimated that for every 100 individuals that availed of the scheme, the cost to the Exchequer would be approximately €5 million. The recent review of SARP has shown that just 12 individuals availed of the scheme in 2012 and provisional figures show that 31 individuals availed of it in 2013.
As the Deputy will be aware, my officials conducted a review of the special assignee relief programme in advance of this year's budget. The review analysed aspects of the scheme such as the background and rationale for the programme and data available from the Revenue Commissioners, including the cost and take-up of the programme. In addition, a public consultation was held. A report was written on the review and this has been published on the budget website.
Taking into account the review, on budget day I announced the amendments the Deputy has mentioned. Based on discussions with stakeholders, I believe that these measures are a positive step forward as part of a range of measures, forming a roadmap for securing Ireland's place as a destination for the best and most successful companies in the world. It is not, however, possible to predict what the take-up will be. I have provided an estimated additional cost of €1 million in 2015 for the scheme. My Department and the Revenue Commissioners will keep the levels of take-up of the programme under review.
The SARP was a massive tax break provided by the Government to the highest-paid executives who qualified for it. A qualifying chief executive on €500,000 a year would increase his or her take-home pay by a breathtaking €52,275 per year. The Minister had instituted a cap of €500,000, but now he is removing that cap, so that somebody on €750,000 will get not just the €52,275 I mentioned but an extra €30,750, giving an extra take-home amount of €83,000. This is an incredible inequality in our society at a time when the Minister is hammering the poorest people and middle- and low-income workers with water charges and other austerity burdens. It speaks volumes about the ethos of the Government.
Countries all around the world compete for foreign direct investment, and in recent years schemes such as this have become the norm, especially in western Europe. Countries with a high marginal rate of income tax, such as Ireland, face a competitive disadvantage in attracting key personnel. Holland has a scheme which is even more generous than anything I am putting on the table, and the Dutch are direct competitors with us for foreign direct investment.
The scheme intends to provide for start-up businesses in bringing to Ireland key people without whom the business would not take off or development of the industry would not take place. That is being done based on the advice I got. The scheme has applied to few people. In the year of introduction only 12 people took it up, and in the last year for which we have figures the initial estimate is that up to 31 people took it up. As the whole debate on international tax avoidance develops, the OECD's policy position is that the test of validity is that real economic endeavour takes place - in other words, no brass plates. If we can get key individuals in - some of the key people in multinational companies - we can prove easily that real activity is taking place in our jurisdiction.
This is just further proof and an illustration of the huge anomalies created by weak Irish capitalism over the past 30 or 40 years, which has completely made itself over-dependent on multinational investment instead of developing indigenous industries and more organic investment locally. SARP is a typical result of this. Who lobbied the Minister for this? Who are the stakeholders who wanted it? I agree that only a small number of individuals benefit, but the scheme is highly symbolic of the massive chasm between the richest in this country - people with huge take-home pay, chief executives, etc. - and those ordinary people who under austerity are getting hammered on a daily basis. Where is the break for those people, given that the Minister is attempting to wipe out with a water tax whatever minuscule concessions were given in the budget?
The people who make submissions on these matters are those who are familiar with foreign direct investment and its benefits for the country and with the platforms that are necessary to attract foreign direct investment to Ireland against competition from other countries. Many people made submissions when we opened the consultative process, but principal among them were the IDA, the American Chamber of Commerce, IBEC, and the tax practitioners and big firms that represent foreign direct investment here. These made their submissions and we made a judgment. We also get submissions from people who do not have expertise in the area but who have strong opinions on these matters, and we take these into account.
The objective is to have more foreign direct investment in the country so that more jobs are created. I do not disagree with the Deputy that the model in Ireland has been lopsided. Not enough attention has been given to growing indigenous industry into multinational industry.
However, the Deputy will notice that is not true of this Administration and that in every Finance Bill we have concentrated on agriculture and food and tourism which we are growing into major industries, even bigger than they historically were. I will continue to do this. While foreign direct investment is very important, the growth of indigenous industry with deep roots in Irish society is equally important.
A total of 150,000 people made a submission to the Government on Saturday. Will it listen to them?
There is evidence that the Government is listening.
I am afraid that the time for parliamentary questions has expired. We will now move on to the Finance Bill.
We started ten minutes late.
The Deputy should read Standing Orders. The time for parliamentary questions runs from 9.30 a.m. to 10.45 a.m. It is now almost 10.55 a.m. and I have to-----
You can extend the time allowed. We started ten minutes late.
That is not my fault. I was standing outside the door, waiting for a quorum to be provided.
It is very rare that we get a chance to question the Minister.
I am sorry, but it is up to others to make certain that Members are present to form a quorum. I cannot do anything about it; I only apply the rules of the House.
On a point of order, I had to come in to ensure there was a quorum. The Government is supposed to provide a quorum.
That is not my problem and there is no point in blaming me for it.
The Ceann Comhairle said at the outset that while, on the one hand, Question Time would run to 10.45 a.m., on the other, 75 minutes were to be allocated.
I have checked with the official who advises me that the new Standing Order states Question Time will run from 9.30 a.m. to 10.45 a.m.
It is extremely unfair on a Deputy who has to make special child care arrangements to be here to ask the question.
I know it is unfair and it is not just Deputy Ruth Coppinger who is affected. Deputy Michael McGrath was next in line.
I know that, but is this a ruse by the Government not to show up?
We are not going to waste more time. The Deputy can take up the matter through the Committee on Procedure and Privileges. If it wants to change the rules, I will apply them. I am sorry, but it is up to the Dáil to have a quorum at 9.30 a.m. I have been here since 8.45 a.m.
It is outrageous.
The problem with the rules is that the Government can reduce the time in which we can hold the Minister to account.
No, it is up to the Dáil to provide a quorum.
I was here at 9.25 a.m.
I know that, but that is not the point.
