The Paradise Papers, the social contract and avoiding taxation
Sir, – The comprehensive article by Mark Paul, “Paradise gained – Dublin’s Jervis Centre” (November 10th), shows how easily it is for any property owner to set up an ownership structure which avoids Irish taxation.
Since the abolition of exchange controls around 1990 the freedom to establish companies anywhere in the world is a very simple process.
The problem is that tax havens across the world offer such tempting services of privacy and low or zero taxes, and developing countries including Ireland are losing millions in tax revenues as a result. This leads to high tax rates on personal income and increasing reliance on sales taxes, excise duties and personal and (in theory) corporate taxation.
An Irish property investor has three choices. Purchase the property in their personal name and be subject to personal tax at 40 per cent on the net rental income plus capital gains tax at 33 per cent on ultimate sale. Purchase the property using an Irish company and be subject to 12.5 per cent corporate tax on the net rental income and similarly on the profit arising on the onward sale of the property plus personal tax at 40 per cent on any dividends received. Establish an Isle of Man company (which shields ownership from public view), pay corporation tax at 20 per cent on net rental income with the benefit of deferral using capital allowances and be exempt from capital gains tax. Only when the money returns to Ireland (if ever) do Irish taxes arise.
With the added benefit of complete secrecy, it is easy to understand why the Isle of Man route is so popular.
The moral argument against such a scheme is difficult to sustain when it is all so simple and straight forward save only for the benefit of secrecy – but secrecy about our personal tax affairs is part of our culture.
The only solution is a total ban on all financial dealings with tax havens by the countries of the developed world and a real clampdown on those claiming residency in the Isle of Man, the Channel Islands, Monaco, Luxembourg, Malta, Bermuda, the Caribbean, Mauritius, the Seychelles and myriad Pacific islands. – Yours, etc,
Sir, – The Irish Times has been to the fore in entertaining us with the information in the Paradise Papers about the tax avoidance schemes ably used by corporations and “high net-worth individuals”.
However, it would be remiss of us not to offer some credit, and indeed praise, to successive ministers for finance, as well as the top officials in that department, for the sheer amount of imagination and hard work that has gone into enabling and facilitating such egregious tax avoidance.
It should be abundantly clear to even the densest of us, that the Fine Gael/Fianna Fáil political class has constructed a very efficient modern welfare state.
This obviously does not mean that we get a national health service that is free at the point of entry, a decently funded public transport system, a free education system, proper rent control, or a sensible policy of building lots of public housing only on public land. No!
What Fine Gael/Fianna Fáil have given us is their version of a “republic of opportunity”, a welfare state for tax-avoiding corporations, tax-avoiding wealthy individuals, predatory vulture funds, rackrenting landlords and land-hoarding property “developers”.
They have been extraordinarily successful in this mission, while fooling a not insignificant proportion of us that they have an actual interest in governing the State in the interests of the ordinary citizens who have to live in the place. – Yours, etc,
Kilmainham, Dublin 8.
Sir, – Coverage of Queen Elizabeth “offshore” investments in the Cayman Islands appears to take no account of the fact that it is a British Overseas Territory, so one could argue that it’s no different to her investing in the Isle of Wight.
Similarly, if an EU citizen invests in another EU state, then that surely is entirely within the spirit and rules of the game we are playing. – Yours, etc,