Business Irish

Monday 11 November 2019

Ireland's personal tax regime 'ludicrously penal' on young people - Ryanair boss Michael O'Leary

Ryanair boss blasts penal rates

Ryanair chief executive Michael O’Leary.
Ryanair chief executive Michael O’Leary.

Sarah McCabe

Ireland's personal tax regime is preventing Ryanair staff from buying homes, the airline's chief executive Michael O'Leary has said.

The salary at which the top rate of income tax kicks in - currently €33,800 - should be increased to €100,000, Mr O'Leary told the Sunday Independent.

"How are you meant to buy a house if you are hitting the top rate of tax - which when calculated with PRSI and USC is now around 55pc - at €34,000? That's not enough to allow you to buy a house or to even save to buy a house.

"I think that segment - and clearly that's where a lot of our people are, in the wage space between €34,000 and €100,000 - the fact that they are in the top rate of tax is a disgrace. I think the personal tax regime here in Ireland is far too penal.

"Not necessarily for rich people like me. . . but I think a much bigger issue here is the rate at which younger people hit the top rate of tax. If you're a single person in this country you hit the top rate of tax at around €34,000. That is a ludicrously penal tax regime.

"Far too much Government time is spent providing for the unemployed or the non-income earners . . . I think young people shouldn't hit the top rate of tax until you get to maybe income of €100,000."

The Ryanair boss joins a growing group of high-profile chief executives, many of them from multinationals, who have openly denounced Ireland's personal tax regime.

The American Chamber of Commerce has been particularly vocal on the issue.

Former AmCham president and PayPal Europe chief Louise Phelan has repeatedly described the current marginal rate as being too high and the level at which it applies as too low. The system is a disincentive for multi-nationals considering Ireland as a base, she said in 2014.

In a wide-ranging interview, Mr O'Leary added that the Government will have no ability to control what happens to the Aer Lingus Heathrow slots if the carrier is sold to IAG. The British airline is rumoured to be planning a third bid for Aer Lingus after its first two were rejected.

There has been speculation that the Government will ask IAG to commit to keeping the slots for Aer Lingus, ensuring connectivity between Dublin and London, rather than use them for other routes. Transport Minister Paschal O'Donoghue appeared to support this idea on Friday, stating that the Government's "broader policy priorities" will play a part in the deal.

Mr O'Leary rubbished this concept."At the end of the day the only decision the Irish Government can make is do you want to accept this price for your shares in Aer Lingus or not," he said.

"The idea that somehow the national interest will be preserved in some other way is bogus. All this nonsense about getting assurances. . . you can't get assurances.

"The Irish Government is in the same position as we are - it's simply a shareholder. It is against the law of takeover rules to make different offers to different shareholders. You can only make the same offer to all shareholders. So the only offer that can be made is: here's a price, Irish Government - do you want it or don't you?"

A takeover could see IAG cut the number of Irish flights flown by BA, he added, as well as Aer Lingus.

"Very little of the connecting business today through Heathrow actually goes with Aer Lingus, it's all BA - who have six flights a day between Heathrow and Dublin.

"I think that would be one of the casualties of an IAG takeover of Aer Lingus. I think BA would grab back their six Heathrow slots and use them for something else while notionally committing that they will maintaining their Aer Lingus slots. But there would be a reduction to and from the London market, which wouldn't necessarily be good."

But Ryanair would simply add more London flights to replace the loss, he said.

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