The sharp put down of a previously-floated idea on how Ireland might entice emigrants to return home was a hard political lesson for Minister for Jobs, Enterprise and Innovation Mary Mitchell O’Connor. That it was the Taoiseach in the Dáil chamber who dismissed her proposal for a 30 per cent income tax rate for high-earning emigrants made the rejection very public. It should be acknowledged, however, that an existing scheme – the special assignee relief programme – already offers lower taxes for higher-paid executives who move here. It is used to attract foreign direct investment in specific circumstances.
The Mitchell O’Connor proposal was similar to that contained in a 2015 government document but, on any evaluation, it is hard to disagree with Mr Kenny’s conclusion that it would be “unfair and discriminatory”. Different income tax rates for different people would be politically and socially toxic. Yet the backdrop demands a more meaningful response.
The Programme for Government has committed to bringing back 70,000 Irish emigrants from abroad. There are critical skill shortages across key sectors of the economy, including construction and within the health service where we train too many doctors and nurses for export. On the latter front, the terms and conditions on offer in Ireland simply do not match those in many developed countries.
Entrepreneur Jerry Kennelly has outlined how Ireland produces less than 1,500 graduates a year in software development when around 5,000 are needed. As a result, Irish start-ups have to "scour Europe" in search of suitable software engineers.
There is a particular challenge competing with economic powerhouses which offer better packages, notwithstanding the attractiveness of our tech credentials, a huge multinational presence here, a high quality of life and a cultural vibrancy; all wrapped into an English-speaking location. The relatively high cost of housing and of renting accommodation is an additional negative factor.
Irish society is generally seen as being welcoming in a multi-racial context and inclusive when it comes to minorities and religious tolerance. Arguably, however, that is not enough. As a letter writer to The Irish Times recently suggested, the twin problems of university funding and offering tax incentives to entice emigrants to return could be addressed, for example, by introducing a mechanism whereby third level fees would be allowable against income tax for a period of, say, 20 years.
This and other possibilities merit intensive consideration beyond the simplistic and divisive approach of tinkering with personal taxes.