Noonan's tax relief for top bosses 'to help job creation'
Finance Minister Michael Noonan yesterday defended his new tax breaks for high-paid executives from foreign companies coming to the country.
Mr Noonan expected up to 100 executives with skills not available in Ireland to avail of the tax relief, which makes 30pc of their income between €75,000 and €500,000 exempt from income tax.
He said the measure would cost up to €5m a year. But the idea was to attract skilled workers to head up new sections of a company and create up to 50 jobs at a time.
He cited the example of a specialist manager in research and development being brought over to the country.
He said the relief would only be available initially for two years and would be closely watched by the Department of Finance.
"We'll see. We'll monitor it," he said.
Mr Noonan said the measure was directly requested by the IDA and Enterprise Ireland.
"Similar schemes are in operation in some of the countries with which we compete for investment and can be a persuading factor when companies decide where to locate investment projections."
The measure is included in the Finance Bill 2012, the law which will bring measures announced in the Budget into effect. Mr Noonan said his Finance Bill was a basic document and not elaborate like the bills brought in by one of his predecessors, Charlie McCreevy, which used to amount to another budget.
Mr Noonan is also bringing in support for Irish companies exporting to the growing markets in Brazil, Russia, India, China and South Africa. He said the tax break was deserved by businesses "going out to Peking" to sell their products and doing the country some service.
The foreign-earnings deduction is being introduced to help the companies operating in these five countries.
The maximum amount of income that can be deducted under the scheme will be €35,000 a year.
Mr Noonan said economic circumstances meant the Government must target support where it was most needed.
"I am confident the measures contained in this Finance Bill provide balanced, targeted and effective support to business to encourage job creation which will be the cornerstone of our economic recovery," he said.
Meanwhile, Mr Noonan insisted there were signs of renewed life in the housing market due to the extra tax relief available to those who buy this year.
And he promised that a software problem at the Revenue Commissioners in applying beefed-up mortgage interest relief for those who bought at the height of the boom would be sorted "within weeks".
It emerged at the publication of the Finance Bill that computer systems at Revenue were not set up to allow boom-buyers to get the new higher relief.
Some 270,000 people are entitled to get more mortgage tax relief, a move that takes legal force when the Finance Bill becomes law.
The changes to the relief mean that first-time buyer couples who bought between 2004 and 2008 will be entitled to up to €2,000 a year in extra relief.
But a delay in changing software at Revenue and passing this information on to lenders has meant that people were not getting all of the money they were due.
The rate was only being allowed at 25pc and not the 30pc announced on Budget day.
"I think the issue is that the mortgage relief is at 30pc and they need a bit of time to get their systems compliant," Mr Noonan said yesterday.
"The extra 5pc will be made retrospective over the next couple of weeks."
Essentially the mortgage tax relief is a payment made by Revenue to the lenders for those who qualify and the money is then subtracted from monthly mortgage repayment the householder is due to make.