I propose to take Questions Nos. 234 and 236 to 239, inclusive, together.
The goal of this Government is to support the creation of an additional 200,000 jobs by 2020 with 135,000 outside Dublin and to achieve sustainable full employment. We also want to attract back 70,000 emigrants from abroad. This is a whole of Government effort and is delivered through our integrated Action Plan for Jobs. The Action Plan for Jobs process aims to strengthen the enterprise base, support entrepreneurship and start-ups, regain Ireland’s lost competitiveness and ensure the potential of the regions for development and job creation through Action Plan for Jobs – Regional is fully realised, supported by competitive regional funds.
The Action Plan for Jobs process is working. Over 176,800 more people are at work since the first plan was launched at the start of 2012 and unemployment has fallen to 8.3% in August 2016. The Action Plan for Jobs 2016 commits to 50,000 additional jobs this year. Good progress is being made with 36,000 additional at work in the first six months of the year and the rate of unemployment is now down to 7.9% for September.
One of the strategic objectives of Enterprise 2025 is to create a business environment – including the tax environment – in Ireland where it is easy to start up and grow a business. In relation to taxation policy my key focus is on stimulating increased investment in the productive sector and to ensure Ireland continues to develop its attractiveness as a location of choice for FDI. We want to support the retention and attraction of talent and skills. We also want to support greater levels of innovation to deliver sustainable growth.
The Action Plan for Jobs complements the Government’s Pathways to Work which set outs actions to be taken in support of those that are currently unemployed in order to help them access the labour market and new job opportunities. In addition, we know that there is demand for a range of skills and experienced professionals across the economy. There are opportunities for overseas talent to be attracted to Ireland, including attracting back our emigrants, as set out in the Programme for a Partnership Government.
We also know we need to be competitive for attracting international talent – including in the area of personal tax. Recent analysis by the Irish Tax Institute shows that at lower income levels (€18,000), Ireland has the lowest effective personal tax rate of ten countries examined. However, as income levels rise, taxpayers in Ireland move quickly up the international tables. For example, at salary levels of €55,000, the effective tax rate in Ireland is about 30% compared with 28.4% in the UK, while at salary levels of €75,000 the effective rate of tax paid in Ireland is 35.3% compared with 28.4% in the UK. The OECD has noted that as highly skilled mobile workers can add significant value to an economy that there may be merit, in certain cases, in introducing tax concessions targeted at mobile high-skilled worker. Many countries have implemented favourable tax schemes focused on attracting skilled workers, for example in Netherlands, Belgium, Denmark, Finland, Norway, Sweden and Switzerland. The DJEI submission to the Department of Finance on Tax and Entrepreneurship Review in 2015 identified the need to assess the potential for a dedicated system to allow Irish based businesses to hire key skills from abroad on an internationally competitive basis on the basis that such a system would only be appropriate where there is a key skills shortage and very limited risk of displacement.
My Pre-Budget Submission is prepared based on the commitments on tax measures in the Programme for a Partnership Government agreed in May as well as detailed consultations with the enterprise development agencies, Enterprise Ireland and IDA Ireland and with Science Foundation Ireland. My Department has also consulted with external stakeholder groups and with bodies such as the Retail Consultative Forum and the Advisory Group on Small Business. We have also undertaken comparisons of key developments in other countries with which we compete for trade, investment and talent and have taken account of the views of bodies such as the OECD and IMF, so as to ensure we have evidence based analysis of our tax competitiveness.
I submitted my proposals to the Minister for Finance at the end of June. All proposals are being considered by the Department of Finance in terms of costs and benefits and in the context of the range of proposals received. The Minister for Finance will decide on the balance of measures to be included in the Budget, in the context of the tight fiscal position of the country and the competing demands on scare resources.
