The Irish Government is considering a special tax deal, potentially worth thousands of euros, to lure home highly-skilled emigrants who left Ireland in search of work during the recession. This proposal is one of many the government is considering as a response to Britain's exit from the European Union.
The emigrant tax plan comes from the Minister for Jobs Mary Mitchell O’Connor, who indicated that a tax rate of 30% could be on offer to a range of graduates and entrepreneurs.
These new plans are a response to complaints from Irish workers living abroad who say the marginal tax rate, which is just under 50 percent, is a disincentive to returning home. Also, Irish employers have said that the tax laws around shares and options also act as a block to highly-skilled emigrants returning.
However, the immediate reaction to the proposals has been negative. On Wednesday Irish leader Enda Kenny was asked if he agreed that the proposal was "unfair and discriminatory." He replied "Yes, I do."
A similar tax proposal was submitted by the former Minister for Jobs Richard Bruton in 2015. His tax proposals were watered down by the Department of Finance amid fears that they would infuriate those workers who had remained in Ireland during the recession and recovery years.
Mitchell O’Connor said the lower tax rate of 30 percent would be aimed at those earning in excess of $84,000 (€75,000) in specialist areas such as medicine, science, information technology and finance. It would also apply to entrepreneurs in specialist sectors. This plan would be expected to remain in place for five years.
A Government source said “This is all about making it as attractive as possible for skilled workers who left Ireland during difficult times.
"The budget has to do something to bring our emigrants home.”
Under the new measures, returning skilled immigrants would pay no tax on company shares and options until they sell them. This would bring Ireland in line with the UK’s arrangement, a source from the British government told the Irish Independent.
If adopted by the government, the new tax plan will be included in the upcoming Budget. It is understood that Mitchell O’Connor submitted a revamped version of the proposals, to the Minister of Finance Michael Noonan.
Already some opposition has been voiced.
Newstalk reports that the proposals were not brought to the ministers' meeting or discussed before being published in the newspapers.
Catherine Murphy, TD for the Social Democrats, objects to the proposal as it would not aid those lower skilled workers who also want to return to Ireland.
She said, “You can skirt around the edges for what the real problem is, but the real problem is that the cost of living is one of the biggest disincentives - and one major element of that is housing.
"If you're going to be giving an incentive surely we need carpenters and sparks and laborers and we need to start building houses.
"That would address the issue."
Fianna Fáil TD Dara Calleary told the Irish Examiner he had “concerns,” although he had not discussed the proposals with his party.
"Yes we do need to bring people back. We need to bring very high skilled people back, but we need other ways of bringing them back other than splitting up our tax system for people who might be doing the same job,” said Calleary.
"I would have grave concerns about it, but we do need to see the detail. We do need to bring highly skilled people back, but the best way to do that is a fair system for everybody."