I propose to take Questions Nos. 136 and 141 together.
I am well aware of the important role a competitive personal tax regime plays in attracting inward, job-creating investment and highly-skilled workers into Ireland. It is for that reason that, as soon as resources allowed, I began a process of reducing income taxes in Budgets 2015 and 2016, and intend to continue this process in Budget 2017.
The cost of introducing a tax measure to encourage emigrants to return to the State to work and/or to attract skilled foreign workers here, as referenced by the Deputies, would depend on the number of individuals availing of the measure and their level of income. As a result, there is no robust basis on which to cost such a measure.
I would however point out that a flat rate tax of 30% as described in Deputy Collins' question would result in an increase in taxation for some earners due to the availability of tax credits and the standard rate band. For example, single employees paying Class A Employee PRSI currently have an effective tax rate of less than 30% where their income does not exceed €55,000.
Furthermore, Deputies may recall that I examined proposals last year relating to incentives for returning emigrants, and decided not to proceed with such measures in view of their potential to distort the labour market and to place existing Irish-resident workers at a disadvantage. It is also likely that any such measure targeted specifically at returning Irish emigrants would be in breach of the freedom of movement principles of the European Treaties.
For these reasons, I was not then, and am not now, minded to provide for a relief along the lines suggested.
In the Programme for Partnership Government there is a commitment to ask the Oireachtas to continue to phase out the Universal Social Charge (USC), as part of a wider medium-term income tax reform plan that keeps the tax base broad, reduces excessive tax rates for middle income earners, and limits the benefits for high earners. Reductions will be introduced on a fair basis with an emphasis on low and middle income earners, including workers recently returned or arrived in the State. I believe that these changes will act to make Ireland a more attractive proposition, from an income tax perspective, for all income earners, including those Irish emigrants that may wish to return home.
