Irish Ferries shed jobs but use tax scheme, says Rabbitte

Companies such as Irish Ferries should not be shedding Irish workers and deliberately recruiting non-nationals at "slave rates" if they avail of a tonnage scheme to reduce their tax liability, the Dáil was told yesterday.

Labour leader Pat Rabbitte also questioned the use of the scheme, which could be "manifestly exploited" by a yacht "parked in the middle of the Mediterranean, staffed with non-Irish people, disporting itself in the Mediterranean for the rich and powerful, earning an income of €9 million a year and paying virtually no tax to this Exchequer".

He was referring to the Irish-owned luxury yacht the Christina O, which could qualify for the tax relief because it had been reclassified as a passenger ship.

It was the second time this week in the Dáil that Mr Rabbitte raised the question of tax relief schemes and Taoiseach Bertie Ahern said if there were abuses in the tonnage tax scheme the Revenue Commissioners would investigate.

Mr Ahern also reiterated that residency requirements for tax exiles would be reviewed by the Revenue Commissioners. This would be separate from the review of all tax shelter and relief schemes announced by Minister for Finance Brian Cowen.

Mr Rabbitte had referred to a report yesterday in The Irish Times about Irish Ferries saving €3 million in tax in 2003, as a result of the tonnage tax scheme. Under the tax break, companies pay a nominal tax on profits, based on a ship's tonnage.

The Labour leader said his party colleague Brendan Howlin had last October highlighted that Irish Ferries had "decided to lay off 150 staff on the Ireland to France routes and to transfer its crewing to a third party agency - in other words, to recruit cheap, non-national labour in breach of the labour regulations and to dis-employ Irish workers.

"Isn't the least we could expect from these companies that are treated so well in terms of our tax code that they would observe high standards in work practices?"

Mr Ahern said the shipping tax scheme, which operated in another 11 EU states, had been introduced in 2002 to help the Irish shipping sector, which faced competition from ships registered in Liberia and similar countries and which were crewed by low-cost employees.

First introduced 35 years ago by Greece, the scheme was cleared by the European Commission for state-aid purposes, because it was conscious of protecting the EU shipping sector.

The Taoiseach said he did not know if there were abuses or if a case was under investigation, but "the rules are clear and the Revenue Commissioners have stringent powers in that area and would use them if anyone was abusing the system."

Mr Rabbitte said the Minister for Finance had told the RTÉ Primetime documentary he had no plans to review the residency system for tax exiles. Mr Ahern said, however, that "the Revenue are carrying out a review and will report back to the Minister who will take action if he believes there is a need for change."