Varadkar blames high taxes for brain drain
OUR "best and brightest" are paying too much tax and should be given some relief to stop the brain drain, a senior minister has warned.
Highly qualified younger workers are going to Canada, the US and Australia because they are getting "a better lifestyle, higher pay and lower taxes", Transport Minister Leo Varadkar told the Irish Independent.
He said recent figures showing many highly skilled workers are emigrating highlight the need to keep taxes low.
"Equality and fairness are important, but we must not push our best talent out of Ireland," he said.
Mr Varadkar's comments will be seen as a signal of Fine Gael priorities once Ireland exits the bailout, and of putting down a marker to Labour if it tries to push again for tax increases during the lifetime of this Government.
The Dublin West TD said that while it is too early to introduce tax cuts now, it should be on the agenda, particularly for income tax and the Universal Social Charge (USC), once the country exits the bailout.
Mr Varadkar's comments came after junior finance minister Brian Hayes said the Government cannot continue to "tax the hell" out of people and as preparations for the October 15 Budget intensify.
The Government will get the crucial figures for the September Exchequer returns today, which will allow it to make a final call on the Budget adjustment.
The Coalition is keen that people are given some indication that years of pain are coming to an end, even if austerity will not end just yet.
"We need to show people that we're on the way out of this situation," a Labour source said.
Mr Varadkar said: "People calling for more tax hikes for the successful need to consider the effect that would have."
He added that young people moving up the career ladder are seeing almost half their extra earnings taken in tax.
The Coalition almost came to breaking point before last year's Budget, when Labour demands for a 3pc increase in the USC failed when Fine Gael countered with a proposal for an across-the-board cut of 3pc in welfare rates.
Negotiations for the upcoming Budget will intensify this week, and the Government is expected to decide on a final figure for the exact number of cuts and taxes. The final figure is expected to be between the originally planned €3.1bn and the €2.5bn Labour is pushing for.
Any leeway is unlikely to be used to cut taxes. Labour wants some let-up in welfare and education cuts while Fine Gael says any extra money will be used to stimulate jobs.
But the new tax concerns have been sparked by a study released last week which found a disproportionate number of highly educated young people are leaving the country, with rural Ireland most affected.
It said 62pc of recent emigrants have a degree from a third-level course of three years or more.
The UCC study also found half of those emigrating left full-time jobs to go to another country and less than a quarter were unemployed.
Mr Varadkar said the study "debunks the myth that everyone who is emigrating is unemployed". "In fact, most have jobs and many are highly skilled or qualified," he said. "I know from my own experience and peers that we are losing really well-qualified people to other countries."
He also pointed out that not only has the economic crisis reduced salaries, but workers were being moved into the higher rate of tax – at 52pc – when they are earning average wages.
By Fiach Kelly, Political Correspondent