Monday 23 July 2018

High income tax 'a problem in attracting and keeping talent'

Taoiseach Leo Varadkar. Photo: Getty Images
Taoiseach Leo Varadkar. Photo: Getty Images

Gordon Deegan

Taoiseach Leo Varadkar has admitted that the country's "very high income tax rates are a serious problem" in attracting talent into the economy.

Addressing a Shannon Chamber of Commerce event at Dromoland Castle, Co Clare, at the weekend, Mr Varadkar said that this "is something we are aware of and want to change into the future".

The American Chamber of Commence has been lobbying the Government to address the regime for high earners to make it more attractive for them to come here and stay here.

The Taoiseach also stated the Government will remain firm in defending the 12.5pc corporation tax rate.

"It is not going to change. It is Government policy to leave it as it is. Our view is that tax is a national competence and that national governments should set national taxes," he said.

"Are we coming under pressure on it? You bet and we are. We will continue to resist any attempts to change."

The Taoiseach pointed out that other countries, such as Bulgaria and Hungary, have lower corporation tax rates than Ireland.

He also said that France "on paper has a very high corporation tax of 30-something per cent, but it has so many exceptions, rules and get-out clauses that they actually collect less than we do as a percentage of GDP". He added: "We have a strong defence."

In wide-ranging comments on aviation and taxation policy, Mr Varadkar said that if there was no Government aviation policy in place, "half of the country's regional airports would close down".

He said: "Certainly without Government support, Kerry, Donegal and possibly Knock airports would close and Shannon and Cork would struggle even more.

"The purpose of aviation isn't to change reality or overturn the real world as it is - it is an attempt to modify the market and rebalance things from where things would be if there was no Government policy."

He added: "We can't tell airlines where to land and we can't tell people what airports to use. If we tried, we would probably fail. The era of Government commanding that aircraft land in Shannon is long over and I don't think anyone would suggest that we would go back to that."

He said that in the old Soviet Union, the government told people where to live, what to buy in the shops, and where to invest.

"That system doesn't work," he said.

Mr Varadkar also stated that he "is absolutely certain" that it was the right Government decision to give Shannon Airport its independence.

Passenger numbers at Shannon have increased from 1.4 million to 1.7 million since January 2013.

He said: "I am absolutely certain that it was the right decision to separate Shannon from the other airports and give its independence, but I am also absolutely certain that we are only getting started and there is so much more that can be done to develop the area."

Mr Varadkar added the airport should be aiming to hit 3.5 million passengers each year.

Irish Independent

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