Reforms offer top bosses tax breaks
Top executives of some foreign-owned multinationals could earn up to €650,000 tax free under a raft of new budget reforms.
While there are plans to ease mortgage debt, Finance Minister Michael Noonan has been fiercely criticised for a 30% tax break for the highest earners included in the Finance Bill.
Sinn Féin said boardroom chiefs who avail of the new relief over five years could earn €130,000 a year tax free.
Mr Noonan claimed the top earners’ tax break could be a deciding factor when a company is selecting a region to locate new divisions or product development.
“The objective is to take our very limited resources and apply them to areas where there is the best employment potential and returns for that investment of public money,” he said.
The Special Assignee Relief Programme will cut tax bills by 30% on money earned between €75,000 and €500,000 for employees moved to Ireland to work for at least one year.
The relief will be available for up to five years from the end of 2014 and it expires in 2017.
Pearse Doherty, Sinn Féin finance spokesman, said the executive tax break will be worth millions and punishes the low and middle income earners while rewarding the wealthy.
“The Government are doing so without any guarantee that this new tax break will result in a single job being created,” he said.
“It is not spelt out, nor is it believable, how one high earning individual could come to this state and create more jobs purely because of a larger tax-free incentive for themselves.”
“The Government is aware that we currently have 14% unemployment in this state and its answer is to offer tax incentives to high earners in other states to come work here. You couldn’t make it up.”
There is also the much promised relief for homeowners who bought near the peak of the market.
First time buyers who entered the market between 2004-08 will get 30% interest relief on repayments while a 25% relief will also be available for first-time buyers who buy this year and 15% for non-first time buyers this year.
Jack O’Connor, Siptu general president, said the reforms in the bill were “deeply disappointing and a lost opportunity”.
The trade union chief said the Government should be looking to encourage the use of the €70bn held in private pension funds to help reinvigorate the economy through developing broadband, energy retrofitting and water treatment.
“This would have had a significant economy wide impact through the procurement of services, goods and the generation of employment,” he said.
“An imaginative approach would have found a way of generating tens of thousands of jobs by exempting from the Pension Levy funds which invest more than 5% of their assets in the development of vital infrastructure and job creation. This could amount to some €3-4bn in the generation of tens of thousands of new jobs.”
The Finance Bill also confirmed other changes to tax law including giving many types of bread a zero rate VAT such as loaves, rolls, batch bread, bagels, baps, blaas, burger buns, finger rolls, wraps, naan breads and pitta bread.
Other changes show the exemption threshold increases from €4,004-€10,036 for the Universal Social Charge. Deposit Interest Retention Tax rate has been increased by 3% to 30%.
Ibec, the group that represents Irish business, today welcomed a number of positive measures in the Finance Bill, which will support enterprise and employment. While the Bill contains no major new measures, the group said the detail provided on a number of schemes announced on Budget day looked promising.
Fergal O’Brien, Ibec chief economist, said the tax break for executives is something it has been pushing for for years.
“The new scheme will enhance Ireland’s reputation as an investment location and help Irish-based companies attract individuals with specialist skills to the country, and build teams around them,” he said.
The change will result in new job opportunities for Irish people and additional tax revenue for the Exchequer.“
The Bill will go through the Oireachtas in the coming weeks.
