Ireland’s competitive Corporation Tax rate hides the fact that, taken holistically, Ireland’s taxation
system is uncompetitive compared to international peer countries. Specifically, Ireland’s Personal
Taxation rates make it distinctly uncompetitive, especially for the indigenous businesses who conduct
the majority of their commerce in the State, for whom the cost of creating and maintaining a job has
far more of an impact on their competitiveness than Corporation Tax.
In particular, Ireland’s high personal tax rates make it far more difficult for our home-grown
indigenous businesses to attract and retain talented employees. These businesses may not be able to
offer the same level of compensation and benefits as foreign companies who can offset high tax rates
with other perks such as shares in globally listed firms. This can make it harder for indigenous
businesses to grow and expand, which can have a negative impact on the overall economy. Companies
must accordingly “wage equalise”, that is pay a premium to a prospective employee to match the
increased tax burden they face here, and in fact more often it prevents the job from being created in
the first instance.
The effect of high Personal Taxation Rates has an outsized effect on indigenous businesses, when
compared to their FDI peers. A multi-national might locate labour-intensive work in another
jurisdiction while booking its profits for Corporation Tax here. Indigenous businesses take pride in
creating jobs in their local communities and will naturally be far less likely to relocate jobs abroad
where their employees’ exposure to onerous income taxes would be less. For indigenous businesses,
this makes the relative cost of creating jobs here far more important than low Corporation Taxes. It
also makes these high Personal Tax rates far more critical to their competitiveness than it would be to
the balance sheet of a large global corporation.

To read the full submission please click here: FBN Submission to the Public Consultation on the Personal Tax System