Sir, – You report (News, September 12th) on the background to the restriction of the Special Assignee Relief Programme (Sarp) which is now capped at an annual income ceiling of €1 million. You notes that the number of executives availing of the scheme escalated in 2015 and 2016 after an earlier cap of €500,000 was removed.
Briefing notes prepared by the Department of Finance, on which you reported on March 18th, purport to show that Sarp cost the State €18.1 million in 2016, more than double the cost in the previous year, and that 18 people availing of Sarp earned between €1 million and €10 million a year and enjoyed a tax benefit ranging from €110,000 to €1 million. The Revenue Commissioners believed that highly-paid executives were “deliberately” choosing to come to Ireland because of the lack of an earnings cap on the scheme.
I think we can readily agree that highly-paid and very mobile international executives would not “deliberately choose” to come to Ireland for the privilege of paying one of the highest personal tax burdens in the developed world. Sarp is a recognition of this reality.
The fact that such people do come here is simple testament to the fact that Sarp achieved its objective of attracting high-income executives who would not otherwise be in Ireland.
As your report points out, Sarp operates by taking 30 per cent of the assignee’s income out of the charge to Irish income tax. This means that 70 per cent of her income is subject to Irish income tax. If one accepts the Revenue depiction of these individuals as executives who choose to be in Ireland because of Sarp and who by implication would not be in Ireland but for Sarp, the question of a cost does not arise. On the figures produced by the Department of Finance, it seems to me that the correct analysis is not that there was a cost of €18 million in 2016 but rather that the exchequer collected income tax of about €40 million on the 70 per cent of income which was taxed in Ireland as well as the various other taxes paid here by high-income assignees.
What’s not to like about that?
The American Chamber of Commerce Ireland points out that Irish workers pay tax at a marginal rate of 52 per cent on relatively modest incomes (Business, September 12th). American business executives must be at a loss to characterise our country given that Bernie Sanders was branded a crazed socialist by the American right when he proposed a 52 per cent marginal income tax rate on annual income in excess of $10 million. – Yours, etc,
Sir, – I am recently amazed by senior Irish economists commenting on the “inexplicable” increase in corporation tax paid in this country.
A regular reading of your excellent business section makes it all very “explicable”. Tax exemptions for senior executives of foreign companies has led to some of them avoiding up to €1 million in personal tax per year. By locating their companies here more corporation tax is avoided by schemes that have yet to be wound up.
A recent report notes that up to two-thirds of these companies are shell companies, with no physical presence in this country.
We have a seasoned cohort of financial advisers who facilitate every perfectly legal avoidance strategy to the maximum.
The Government is absolutely content with this and resistant to international changes.The sad fact that we are depriving other countries of tax revenue for hospitals, schools and pensions just does not register.
Perhaps economists, who view their speciality as a science and use words like “supply and demand” and “market forces” have no way of inserting the word “greed” into their vocabulary, leaving many economic phenomena inexplicable. – Yours, etc,