Thursday, 26 September 2019

Questions (5)

Róisín Shortall


5. Deputy Róisín Shortall asked the Minister for Finance when the review of the special assignee relief programme will be completed; and his views on the fairness of operating such a scheme. [39219/19]

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Oral answers (17 contributions) (Question to Finance)

I refer to the special assignee relief programme which many consider to be deeply unfair. The Minister promised a review of it. When will it be completed and published? What is the Minister's view on the fairness or otherwise of the scheme?

The special assignee relief programme, SARP, is an income tax incentive aimed at reducing the cost to employers of assigning key individuals in their companies from abroad to take up temporary, short-term positions in the Irish-based operations of the employer, with a view to transferring essential skills to Irish-based companies. For example, such individuals may be transferred to head up new divisions of the company or take charge of new product development.

In accordance with the Department of Finance tax expenditure guidelines, the SARP is the subject of an independent review which is being carried out by Indecon Economic Consultants. The review exercise affords an opportunity to look at all elements of the relief and also includes consultation with stakeholders. The terms of reference of the review include the continuing relevance of the programme; the performance of the programme in meeting its objectives; its particular features; the annual cost and the overall impact. The appropriateness of the current upper and lower limits on the quantum of income that should benefit from the tax relief is also to be examined, having regard to the objectives of the scheme and the principles of tax equity. The report is being finalised and I expect that it will be submitted to my Department in the next few days. It is my intention to publish the report in the context of the forthcoming budget and Finance Bill.

Our enterprise policy is based on export-led growth, of which foreign direct investment is an important part. Programmes such as the SARP have a role to play in allowing industries to develop in the economy that, in turn, generate the export performance on which we are dependent. However, I am conscious of the broader principle of tax equity. That is one of the reasons I made a change last year in respect of the maximum amount of income that could be claimed under the programme.

There are very serious principles underlying this scheme and it indicates a view within the Department of Finance and the IDA which is fundamentally wrong. There are skills shortages right across the economy but we do not offer sweetheart deals to other categories of staff. I have a real concern about this and cannot see any justification for it. I also have a concern about the complete lack of proper oversight of this scheme. I asked about it recently but the most up to date figures that the Department could produce were for 2016. This reminds me of the lack of data on the big pension funds that are getting huge tax reliefs and which are costing the State millions of euro every year. Why does the Minister not have information on how much this scheme is currently costing us? What is the projected cost of the scheme for 2019? This seems to be a secret kind of arrangement organised through the IDA on which we do not get any data. The Minister must come clean on this. We cannot have a situation where we have one law for the rich and another for the poor.

As recently as last year I published a report, which I shared with the Oireachtas, on the operation of this scheme and on the back of sharing that report, I made changes to it. For each of the years for which information is available, I have published the full cost of the scheme, including up to where we were at the end of 2016 and I will share with the Deputy and the House any information that is available to me in respect of the costs of it.

On the Deputy's allegation that this is a sweetheart deal in some way, the principles and the cost of the scheme are clear. A report is due to be submitted to me that I will publish and if that report makes recommendations to address potential issues in relation to equity, I will act upon them. In her own question to me, the Deputy acknowledged that skills shortages are an issue. If she acknowledges the existence of skills shortages and accepts the importance of exports to our economy, as well as the fact that every other country with which we are competing has schemes like this, then I hope she understands that it can play a role in our economy. I made a change to the scheme last year precisely because I wanted to address issues related to equity and fairness.

The Minister introduced a change last year, which brought the limit up to €1 million. Why on earth should we have a scheme where there is a minimum threshold required in order to get a tax advantage? It is only those earning in excess of €75,000 and up to €1 million who can avail of this scheme. This is an affront to ordinary workers, that is, people who are struggling to survive because of the policies of the Government as the cost of living here is going through the roof. Why should there be a special arrangement for people who are better off? Why does the Minister not concentrate on reducing the cost of living instead, which will benefit people right across the economy? There can be no justification for this scheme. While we do have a problem with attracting people with essential skills in different categories, the Department does not do sweetheart deals for all of the other categories of workers in areas where there are shortages. It is deeply unfair and the Minister must end this scheme. It must be scrapped and the IDA must stop entering into these kinds of private arrangements. It must stop depending on these kinds of unfair arrangements in order to do its work.

Comparable schemes operate in France, Holland-----

They do not operate in every country.

-----Denmark, Sweden, Spain, Italy and Finland. The Deputy has acknowledged the difficulties and pressure faced by many citizens at the moment, which I always acknowledge.

The Minister needs to do something about it, not just acknowledge it.

In addition, I had hoped the Deputy might make reference to the fact that we also have 2.3 million people working in our country and that incomes have grown in the first part of this year in a way that will make a real difference to the lives of people.

The Minister needs to get real.

The modus operandi of Deputy Shortall is to put questions to me and when I answer them, to interrupt me as opposed to considering the argument I am seeking to make. The argument I am seeking to make is that many of the countries with which we compete for certain kinds of work have schemes like this one. I will be fully publishing a report on the operation of the scheme. If that report makes recommendations on issues like equity and fairness, I will address them. I represent the ordinary worker and taxpayer too. The ordinary worker and taxpayer needs different forms of employment to be created and different forms of work to come into our country and there are some people who allow that to happen. This is not about sweetheart deals-----

This is about allowing Ireland to be competitive and ensuring that we can continue to create jobs-----

There are no figures-----

-----and investment in our economy.

We do not know how much it is costing.