Austerity is for schmucks

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28 September 2016 | 0

Billy MacInnesI was flabbergasted to read in the Irish Times that the Government is considering introducing a measure in the budget to offer a lower rate of income tax to select high-earning emigrants returning to the country, such as doctors, bankers and IT workers. This incredible scheme, proposed by Mary Mitchell O’Connor, Minister for Jobs, Enterprise & Innovation, would reward people earning over €75,000 who wish to return home with a tax rate of 30% compared to the much higher rates paid by people already living and working in Ireland.

Now while I am supportive of the IT industry, I’m not sure what IT people living abroad have done to deserve this government munificence, subsidised no doubt by the higher rate of taxes of people who have lived in Ireland for years and paid taxes all the way through the painful years of austerity? Where will the money come from to pay for the difference between the tax they would have paid and the tax they will pay? From a reduction in services for people already living in Ireland perhaps?

It seems such an illogical policy and one bound to antagonise people who stayed in Ireland and struggled through austerity, paying their taxes and being rewarded with cuts in services. Why are emigrants being given a special rate? Are they being rewarded for having had the initiative to move abroad to get paid more and taxed less than they would in Ireland? Is that why the government wants to give them a tax regime similar to the one they were used to abroad when they finally opt to return home?

Do we really want a system where a self-employed IT specialist in Ireland ends up paying a lot more in tax than someone with the same skills who has just returned to the country after years abroad? And a system where that measure of unfairness is guaranteed for FIVE years. For five years, one person can pay substantially less tax than another person doing the same job merely because he or she has lived abroad. Really? How does that serve to incentivise people who have lived and worked here for years? Is the government’s message that people ought to consider moving abroad for a couple of years and then returning so they can get a lower rate of tax too? If that is the case and people do move, will that mean those leaving could counteract the ‘benefits’ of the people coming back?

What are we supposed to think of a government made up of TDs voted for by people living and paying taxes in Ireland seriously considering sanctioning a move to reward people who have chosen to do neither for the last few years? How does the government decide which people are worthy of a 30% tax rate? And how can it justify that decision? For example, is a banker or programmer really worthy of a 30% tax rate compared to a garda, nurse, social worker, teacher? We may well have a shortage of skilled IT workers (I’m not so sure about bankers), but our social fabric won’t fall apart because of that, which isn’t the case if we have too few garda, teachers, nurses and social workers. It could be damaged, however, if the government entrenches a two-tier tax regime in place that prioritises people who opted out of Ireland for a few years over those who toughed it out here.

The big question that proponents of this scheme need to answer is: if current tax rates are considered too punitive for people coming back to Ireland, why aren’t they too high for people who already live here? Perhaps they would be better employed trying to construct a tax regime that was fairer for everybody rather than stacking the system in favour of a select few.

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