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What do people think of Leo's big plan to tackle health insurance?

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The recently-installed health minister wants companies to freeze their prices. But can his big idea work? Here's what people think of it...

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Budget 2015 Revealed: 1,000 new teachers and 1pc tax cut in Budget

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Finance Minister Michael Noonan TD

More than 1,000 extra teachers will be employed next September to cater for growing pupil numbers as part of next week's Budget, the Irish Independent has learned.

The package will also include funding for additional relief from water charges for low-income families.

Finance Minister Michael Noonan will also announce a reduction in the higher rate of income tax in a three-year tax cutting package, which may even kick in next year.

The price of a packet of 20 cigarettes is expected to increase by 20c. But the price of alcohol will remain untouched, as Mr Noonan is conscious of the impact any increase in the price of a pint would have on rural pubs.

The Finance Minister will have even more scope to give something back to hard-pressed families after the latest official data shows EU fiscal targets will be easily beaten without any new cuts or taxes.

Health Minister Leo Varadkar has secured nearly all the €500m extra funding he wanted for next year in Budget negotiations.

Education Minister Jan O'Sullivan has won additional funding for teachers in negotiations ahead of next Tuesday's Budget.

The extra teachers will not reduce class sizes as they are needed just to cope with additional pupils in the system.Most of the additional staff will be hired for primary schools, which are experiencing the biggest surge in enrolments.

But there will also be more jobs for second-level teachers.

In the improving economic environment, Ms O'Sullivan has fended off a €39m cut to her 2015 Budget that was envisaged a year ago.

As well as averting the cut, the minister has also secured some additional funding, which means that for the first time since 2008 the education budget will rise next year.

However, it does not mean that certain savings previously announced will be avoided.

The minister is following through on a number of cost-cutting measures, such as cuts in school grants for day-to-day running costs, which will continue in 2015.

Similarly, the programme of increases in the third-level student contribution charge will go ahead, and the fee will rise to €3,000 next September.

Mr Varadkar was looking to get the same amount of money in 2015 as will be spent on the health service this year when the €500m overrun is included.

The additional funding for next year will be made up from a number of sources, including an additional estimate, once-off monies he will be allowed to keep and the benefits to measures the following year.

The net effect will be Mr Varadkar getting the extra funding but the money won't be a permanent allocation from Public Spending Minister Brendan Howlin so he'll have to do battle again next year for 2016.

Tanaiste Joan Burton has secured additional funding to pay for relief from water charges. Ms Burton had already planned to give a €100 discount to 415,000 people on the households benefits packages, including the over 70s, carers and people with disabilities.

But the Tanaiste has secured additional funding to improve the relief package.

Environment Minister Alan Kelly will have a substantial increase in money for housing and will announce a Social Housing Strategy the week after the Budget.

Justice Minister Frances Fitzgerald has got the green light for a significant investment in new garda vehicles. In discussions with Mr Howlin, Ms Fitzgerald has voiced concern about the need to replace the "ageing fleet".

In her budget, the minister will be able to continue garda recruitment next year and replace officers who retire.

Transport Minister Paschal Donohoe has secured additional funding for infrastructure. Mr Donohoe also argued for additional funds in order to increase the subvention to Irish Rail. While sources said they anticipate being able to increase the subvention, the level of increase is less than the minister had hoped.

A new sports capital programme worth at least €20m will be announced. Sports Minister Michael Ring lobbied for the programme this week.

Figures published late last night by the Department of Finance show if no new measures are introduced in the Budget, overspending will fall to 2.4pc next year.

That is well inside the EU imposed target of getting the overspending deficit below 2.9pc of total spending in 2015.

While the figures show we will still be spending more than we earn next year, it means Mr Noonan and Mr Howlin face a tough decision - leave the Budget unchanged and beat the targets, or ease up by lowering taxes and allowing more spending, just enough to stay within the rules.

With a General Election certain within the coming 18 months, and austerity increasingly out of fashion, the odds on giving households and businesses some relief are growing.

A full four days before the Budget is announced, the Cabinet met to sign off on the spending estimates. But Mr Noonan did not divulge the taxation package, which he plans to keep under wraps until Tuesday.

Embattled Arts Minister Heather Humphreys is understood to be seeking extra funding for her Department ahead of the 1916 Rising commemorations in two years time. A number of events are due to be held around the country celebrating the 100th anniversary of the Easter Rising. It is understood Ms Humphreys did not secure any additional funding at yesterday's Cabinet meeting but there is a possibility extra resources will be announced in next week's Budget.

New Rural Affairs minister Ann Phelan is said to be "hopeful" of securing a modest stimulus package for rural towns.

The minister wants to support in towns in decline.

Irish Independent

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Budget 2015 Revealed: 1,000 new teachers and 1pc tax cut in Budget - Independent.ie

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More than 1,000 extra teachers will be employed next September to cater for growing pupil numbers as part of next week's Budget, the Irish Independent has learned. The package will also include funding for additional relief from water charges for low-income families.

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by Mike Godfrey, Tax-News.com, Washington

13 October 2014

With the effect that its future tax domicile will now be Ireland rather than Canada, US-based Auxilium Pharmaceuticals Inc. has disclosed the termination of its proposed corporate inversion with QLT Inc. and will instead be acquired by Endo International plc.

The announcement comes after non-legislative measures from the Treasury Department on September 22 to deter the inversions that are being used by US multinationals when merging with an offshore counterpart to move their tax residence abroad and away from the high US corporate tax rate.

Last month, the Heritage Foundation had warned that: "If US businesses are frustrated in their efforts to invert and shake free of the onerous US tax code, they could become - most likely willingly - prime takeover targets for large foreign businesses. If they are bought, instead of inverted, the US will see more significant job losses because more functions of the business will relocate abroad more quickly than under an inversion."

Much earlier, in July this year, Senate Finance Committee Ranking Member Orrin Hatch (R - Utah) had expressed similar concerns about introducing a short-term fix to the inversion problem. He said: "While it may put a stop to traditional inversions, [it] could actually lead to more reverse acquisition inversions as our US multinationals would become more attractive acquisition targets for foreign corporations."

Auxilium, the specialty biopharmaceutical company based in Pennsylvania, announced on October 9 that it had cancelled its inversion transaction with the Canadian-based biotechnology company, QLT. The merger would have transferred its tax domicile to British Columbia.

Instead, Auxilium has succumbed to a USD2.6bn takeover by the branded pharmaceutical and generic product and medical device group, Endo International, with the effect that Auxilium's tax domicile will be transferred to Ireland.

Endo itself completed an inversion in February this year, when it purchased Canadian specialty pharmaceutical company Paladin Labs Inc. and also moved its global headquarters from Pennsylvania to Dublin.

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Auxilium Cancels Inversion, Agrees Takeover Instead

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With the effect that its future tax domicile will now be Ireland rather than Canada, US-based Auxilium Pharmaceuticals Inc. has disclosed the termination of its proposed corporate inversion with QLT Inc. and will instead be acquired by Endo International plc.

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Germany expects Irish tax reform in return for IMF loan restructuring

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Germany has said it expects Ireland to reform its tax system after Berlin backed its request to restructure the Irish EU/IMF loan package - a change which could save the exchequer an estimated €400 million annually.

The Bundestag's quid pro quo demand came as MPs backed Ireland's request to set aside a provision of its bailout programme requiring EU and IMF loans to be restructured in parallel. German government MPs urged Dublin to use the money saved by the loan adjustment to improve its debt position rather than financing tax cuts.

Yesterday's positive vote in Berlin was a significant step in Ireland's campaign to repay early €18 billion of its €22.5 billion IMF loan, refinanced by lower interest loans on financial markets, without altering the terms of EU crisis loans.

Changing the terms of Ireland's EU/IMF programme requires unanimity from all EU member states and Bundestag support is a pre-requisite to Berlin agreeing any bailout changes.

Support for Ireland's request came from the governing Christian Democratic Union (CDU), its Bavarian CSU allies, the Social Democratic Party (SPD) coalition partners and, with one abstention, the opposition Green Party. The opposition Left Party voted against the measure.

Despite widespread praise for Ireland's reform efforts yesterday, the Bundestag debate was shot through with demands that Dublin move to close tax loopholes for multinationals.

Before the vote the Bundestag budget committee called on Berlin to "continue unabated" its bilateral and multilateral campaign to reduce legal tax avoidance in Ireland.

"Solidarity is not a one-way street, we expect from Ireland solidarity with its European partners, for example in tax questions," said deputy finance minister Steffen Kampeter in the Bundestag. He said Ireland was "doing itself no favours" with a fiscal regime that gave large companies based in Ireland, "mostly US companies ... a huge tax advantage compared to European companies".

With a nod to ongoing international talks, Mr Kampeter welcomed a new Irish willingness to discuss its tax residency provisions for companies. The goal of such talks, he said, "should not be about abolishing all tax advantages but fair tax competition for all in Europe".

Mr Kampeter said that it was in the interests of Ireland, Germany and Europe to accede to Ireland's request. Ireland's rapid recovery, he said, had proven right the decision to make assistance for crisis countries conditional on structural reforms.

"For all of those who didn't believe in this programme and who painted doom-laden scenarios ... perhaps you should apologise to those who stood for this strategy," said Mr Kampeter to the Bundestag.

CDU MP Norbert Barthle, member of the Bundestag finance committee, agreed with the restructuring request but promised German foreign minister Wolfgang Schäuble "would continue to push Ireland to move" on its tax regime.

"Ireland is harvesting the fruit of its efforts in the last three years and those efforts were not inconsiderable," said Mr Barthle. "It shows that the right economic mix -- of demand- and supply-side policies, combined with structural reform and growth-driving impulses -- are the right way out of malaise."

The CDU's coalition partner, the Social Democratic Party (SPD), agreed with the loan change request from Ireland, though their support came with a "big but".

"The Irish government should use the money save to reduce its debt position," said SPD MP Johannes Kahrs. "If the Irish government considers using the money saved for an income tax reduction, one has to ask ... why this is happening in Ireland and not here."

The opposition Left Party said adjusting the EU/IMF programme's repayment did not make it any fairer for the Irish people, who had shouldered the cost of bank speculation.

"Rescuing Ireland was not just a gesture of solidarity but lay in the interest of German big banks," said Left MP Richard Pitterle, saying German bank exposure to Ireland in 2010 was $138 billion.

The Green Party supported the loan adjustment, with one abstention. But Ireland's situation should not be viewed with "rose-tinted glasses" given continued high debt levels and youth unemployment.

Green Party MP Sven Christian Kindler called on Dublin to use money saved to "investment in education and climate protection".

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Germany expects Irish tax reform in return for IMF loan restructuring

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Germany has said it expects Ireland to reform its tax system after Berlin backed its request to restructure the Irish EU/IMF loan package - a change which could save the exchequer an estimated €400 million annually.

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http://businessetc.thejournal.ie/us-tax-inversions-ireland-1685263-Sep2014/?utm_source=twitter_sel

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new start-up strategy could create 93,000 jobs

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Jobs Minister Richard Bruton has said that the government's new start-up strategy can help to create 93,000 jobs within five years.

Minister Bruton says the plan to double funding to start-ups from private investors can increase the number of new companies by 3,000 per year.

The strategy also includes measures to increase "accelerator" premises for start-ups.

Minister Bruton says entrepreneurship has suffered in recent years - and the Government wants that to change.

"Two thirds of all jobs that are created in an economy come from enterprises in their first five years of existence," he said.

"We believe that entrepreneurship in Ireland has been through a difficult time - now is the right time to create a coherent strategy to deliver for it."

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Bruton: New start-up strategy could create 93,000 jobs

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Jobs Minister Richard Bruton has said that the government's new start-up strategy can help to create 93,000 jobs within five years. Minister Bruton says the plan to double funding to start-ups from private investors can increase the number of new companies by 3,000 per year.

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SIPTU calls for VAT rate to be linked to JLC wage-setting in hospitality sector

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SIPTU has called on Minister for Finance Michael Noonan to withdraw the 9% VAT rate from the hospitality sector unless employers agree to take part in a Joint Labour Committee (JLC) to regulate wages and conditions.

The union claims employers have refused to pass on the real financial benefit of the cut to customers, employees or the Exchequer.

However, the Restaurants Association of Ireland has accused SIPTU of targeting the most successful job creation measure.

The JLC wage-setting mechanisms were struck down by the Supreme Court in 2011, but new legislation has been passed to restore the sectoral wage deals to protect hundreds of thousands of low-paid workers.

SIPTU said hospitality employers have refused to negotiate a new JLC for the sector.

The union said employers have benefited from the 2011 cut in VAT from 13.5% to 9%, which was intended to stimulate employment.

SIPTU claims research shows that employers have not passed on the benefits of that cut.

It said employers driving down wages and conditions have fuelled a shortage of skilled staff, and that many of the new jobs in the sector are part-time.

The Restaurants Association of Ireland rejected SIPTU's claims.

RAI Chief Executive Adrian Cummins said the previous hospitality JLC had been unworkable and that SIPTU was attacking a highly successful job creation measure.

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Call for VAT rate to be linked to JLC wage-setting

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SIPTU has called on Minister for Finance Michael Noonan to withdraw the 9% VAT rate from the hospitality sector unless employers agree to take part in a Joint Labour Committee (JLC) to regulate wages and conditions. The union claims employers have refused to pass on the real financial benefit of the cut to customers, employees or the Exchequer.

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Technology giant Apple's tax affairs in Ireland are already under the spotlight after European authorities in June launched a probe into a tax treatment they claimed amounts to illegal state aid.

Corporate tax avoidance has come under the spotlight on both sides of the Atlantic in recent years, as perfectly legal deals with authorities help companies save millions of dollars. Critics say the deals are a form of subsidy at ordinary taxpayers' expense.

The European Commission is examining whether Luxembourg broke EU state aid rules by agreeing a deal which allows Amazon to operate almost tax free in Europe.

Amazon is structured so that all online sales in Europe are technically between customers and a Luxembourg company. Despite racking up almost €14bn of sales each year, Amazon's main European subsidiary, Amazon EU Sarl, reports almost no profit.

That is at least partly because it pays hefty fees to its immediate parent, Amazon Europe Holding Technologies (AEHT), a tax exempt partnership, in return for using Amazon intellectual property.

The Commission said it was investigating a 2003 deal between Amazon and Luxembourg that underpins this arrangement. The Commission said the agreement could give Amazon an economic advantage over other companies without such rulings.

The US company denied receiving preferential treatment.

"Amazon has received no special tax treatment from Luxembourg, we are subject to the same tax laws as other companies operating here," it said in a statement.

Luxembourg's finance ministry denied any wrongdoing.

"Luxembourg is confident that the allegations of state aid in this case are unsubstantiated and that the Commission investigation will conclude that no special tax treatment or advantage has been awarded to Amazon," it said in a statement.

Amazon is already locked in a court battle with the US Internal Revenue Service over the arrangement by which the Luxembourg partnership came to enjoy the rights to sell on Amazon's intellectual property outside the United States.

In court filings, Amazon has denied undercharging AEHT for these rights.

Companies found guilty of breaching EU rules on state aid could be forced to repay what Brussels determines to have been the amount of support given.

Amazon joins fellow US company Apple in the Commission's sights after the watchdog accused Ireland of swerving international tax rules in its tax arrangements with the iPhone maker.

The Commission is also investigating similar deals between coffee chain Starbucks and the Netherlands and Luxembourg tax rulings for a subsidiary of carmaker Fiat.

Irish Independent

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Amazon's Luxembourg tax bill in the spotlight as EU widens probe - Independent.ie

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Technology giant Apple's tax affairs in Ireland are already under the spotlight after European authorities in June launched a probe into a tax treatment they claimed amounts to illegal state aid. Corporate tax avoidance has come under the spotlight on both sides of the Atlantic in recent years, as perfectly legal deals with authorities help companies save millions of dollars.

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Lorna Brennan                                                                                                                                                                                                                                                  What do people think of Leo’s big plan to tackle health insurance?The recently-installed health minister wants companies to freeze their prices. But can his big idea work? Here’s what people think of it…HEALTH MINISTER LEO Varadkar is planning to tackle price rises in the health insurance sector by offering a Government commitment not to increase some taxes on the industry for up to two years.Insurance companies would be asked to freeze their prices in return as part of the plan, details of which were revealed this morning in the Irish Times. The proposal, which is to be discussed by Cabinet in the next few weeks, would see the Government offer a freeze on increases in stamp duty levies paid by the insurers, which go into a ‘risk equalisation’ fund used to compensate companies with a larger number of older, less profitable customers.The duty was increased by former Health Minister James Reilly last year, and companies passed the increase on to customers when the changes came into effect in March.Another part of the plan being proposed by Varadkar would see a sliding scale of discounts offered to younger people aged between 21 and 24. There’s been a fall-off in younger people taking out insurance policies in recent years.The community rating system, whereby customers who wait until they’re 35 to take out insurance will face a financial penalty, is also due to come into effect next year.

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Lorna Brennan                                                                                                                                                                                                                                                  What do people think of Leo’s big plan to tackle health insurance?The recently-installed health minister wants companies to freeze their prices. But can his big idea work? Here’s what people think of it…HEALTH MINISTER LEO Varadkar is planning to tackle price rises in the health insurance sector by offering a Government commitment not to increase some taxes on the industry for up to two years.Insurance companies would be asked to freeze their prices in return as part of the plan, details of which were revealed this morning in the Irish Times. The proposal, which is to be discussed by Cabinet in the next few weeks, would see the Government offer a freeze on increases in stamp duty levies paid by the insurers, which go into a ‘risk equalisation’ fund used to compensate companies with a larger number of older, less profitable customers.The duty was increased by former Health Minister James Reilly last year, and companies passed the increase on to customers when the changes came into effect in March.Another part of the plan being proposed by Varadkar would see a sliding scale of discounts offered to younger people aged between 21 and 24. There’s been a fall-off in younger people taking out insurance policies in recent years.The community rating system, whereby customers who wait until they’re 35 to take out insurance will face a financial penalty, is also due to come into effect next year.

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Five star hotel group slips further into red despite 14% rise in revenue.

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Killarney Hotels Ltd operates the award-winning five-star The Europe Hotel & Resort and the five-star 102-bedroom Dunloe Castle Hotel along with the four-star Hotel Ard na Sidhe.

Now, accounts just filed by the Swiss-owned firm to the Companies Office show that the group recorded a pre-tax loss of €7.6m last year.

This followed a pre-tax loss of €36.9m in 2012 that mainly arose from a €28m property writedown. Revenues at the hotel group last year increased by 14% from €10.69m to €12.18m.

Turnover at the group has increased by 43% since 2011 when revenues of €8.49m were recorded.

According to the directors' report for 2013, they "consider the performance of the company to be unsatisfactory, although in line with expectation".

A major contributor to the loss last year was a hefty non-cash depreciation charge of €6.95m.

The accounts show that the group recorded a gross loss last year of €4.24m after cost of sales amounted to €16.43m.

Losses were increased by €2m in 'other operating expenses', €569,832 in administration expenses and €746,240 in distribution expenses.

After a tax credit of €974,157, this resulted in a post-tax loss of €6.6m

The directors are listed as Michael Brennan, Gerry Browne and Adrian Stehr and remuneration for the directors last year jumped from €133,800 to €434,731.

The average numbers employed by the group increased from 125 to 143, with staff costs increasing from €5.6m to €6.17m.

In their directors' report, they state that "though the Irish tourism sector is experiencing a revival, there continues to be challenges in the hotel industry in Ireland."

The directors state that "although the company made a loss for the year of €6.6m, the directors have continued to prepare the statements on a 'going concern' basis, as they have received assurances from the company's parent, Liebherr Hotels, that it will provide the company with funds as and when required - to enable it to continue trading for the foreseeable future".

The firm's shareholder funds at the end of last year totalled €14m.

The figures show that the group generated €11.6m of its revenues through its hotels and €498,225 through the operation of a 200-acre farm. The accounts show that Liebherr Hotels loans the firm an additional €1.5m during the year to bring to €45.5m owed by the firm to Liebherr Hotels.

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Five-star hotel group slips further into red despite 14% rise in revenue

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Killarney Hotels Ltd operates the award-winning five-star The Europe Hotel & Resort and the five-star 102-bedroom Dunloe Castle Hotel along with the four-star Hotel Ard na Sidhe. Now, accounts just filed by the Swiss-owned firm to the Companies Office show that the group recorded a pre-tax loss of €7.6m last year.

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A CUT in income tax rates is expected to be included in a three-year plan to provide relief to workers in next week's Budget.

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Income tax rate cut in three-year package - Independent.ie

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A CUT in income tax rates is expected to be included in a three-year plan to provide relief to workers in next week's Budget. But it is not yet clear if the reductions in the marginal rate of 52pc - made up 41pc income tax, 7pc PRSI and 4pc USC - will kick in next year or in 2016 and 2017.

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EU's Apple claim, increases pressure for Irish tax reform

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The EU Commission's deepening inquiry into Apple's tax scheme in Ireland has heightened the stakes for the Government as it examines the corporate tax regime ahead of the budget.

As the Government debates whether to unwind one of the most contentious tax rules, the commission declared yesterday in a separate case that Revenue conferred a "selective" advantage to Apple in tax opinions in 1991 and 2007.

The claim by competition commissioner Joaquín Almunia has been denied by the Government and Apple.

Apple insisted that there was no special tax deal. "Apple has received no selective treatment from Irish officials over the years. We're subject to the same tax laws as the countless other companies who do business in Ireland," said a statement from the company.

The Apple investigation intensifies pressure on the Government as it discusses whether to eliminate a separate tax arrangement known as the "double Irish" in the budget. This plays on the difference between Irish tax law and the law in other countries and is used by major Dublin-based companies, including Google, to lighten tax liabilities.

The Department of Finance is said to broadly favour a pre-emptive move to unwind the scheme. However, there is no consensus as of yet within the Government. It is acknowledged the fallout from the commission's Apple investigation will affect the outcome.

In a letter in June to the Government, made public yesterday, Mr Almunia said Revenue allowed Apple embark on tax arrangements which broke European laws preventing state aid to private companies.

The commission's final decision might not be made for another 18 months and its ultimate findings will take account of formal responses from the Government and Apple. Any definitive adverse ruling against Ireland would be contested in Europe's highest court so the final outcome could be years away.

In his initial assessment, Mr Almunia expressed concern that the taxable income in Ireland attributed to two Apple subsidiaries was too small. Citing official minutes of a meeting between Revenue and Apple, he accused the Irish authorities of "reverse engineering" tax opinions to help Apple minimise its bill.

The Government has always argued that the company did not receive special treatment and that Mr Almunia's opening decision reflects "some misunderstandings".

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EU's Apple claim increases pressure for Irish tax reform

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The EU Commission's deepening inquiry into Apple's tax scheme in Ireland has heightened the stakes for the Government as it examines the corporate tax regime ahead of the budget. As the Government debates whether to unwind one of the most contentious tax rules, the commission declared yesterday in a separate case that Revenue conferred a "selective" advantage to Apple in tax opinions in 1991 and 2007.

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Ireland is in line with its peers when it comes to tax

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Wilbur Mills who was chair of the powerful US House of Representatives Ways and Means Committee for 17 years said "Don't tax him. Don't tax me. Tax the man behind the tree" to describe his experience of people making spending proposals to him that others would pay for.

As we are now in the fiscal equivalent of the "marching season" there is a debate about where adjustments to the tax system should be made. Decisions on this are the essence of politics and are ultimately a matter for political judgement.

What is the evidence that might help inform this political judgement?

Government Borrowing The first step is to set the level of Government borrowing for 2015. Government borrowing is likely to be less than€7 billion or 4 per cent of GDP in 2014. Under EU rules we are committed to reducing this to less than 3 per cent of GDP (less than €6 billion) in 2015 and to eliminate it by 2018.

One of the successes of the Irish adjustment programme has been that we have set realistic targets for the level of borrowing and come in ahead of them, unlike some other countries who have repeatedly missed their targets.

This has helped to regain the confidence of financial markets and enabled us to fund our borrowing requirement at much improved interest rates. All this suggests that we should aim for a deficit below 3 per cent with some margin in case circumstances are adverse.

Progressivity of income tax Much of the debate has centred around income tax. In a recent speech Taoiseach Enda Kenny said: "The Government has agreed that the next priority ......is to reduce the 52 per cent income tax rate on low- and middle-income earners. The 52 per cent marginal tax rate, comprising income tax, PRSI and the Universal Social Charge, is - I believe - anti-enterprise, anti-investment and anti-jobs."

Ireland has the most progressive income tax system (including employee social insurance contributions) in the EU.

The tax paid by a single person on half average earnings(average earnings are just under €36,000) is the second lowest in the OECD (out of 34 countries) and is less than one-thirteenth that in Denmark while the tax paid by a single person on two and a half times average earnings is the 9th highest in the OECD. At average income levels we are the 27th highest in OECD.

A single worker on an income of about €36,000 pays almost €13,000 in income tax and social insurance contributions in Denmark compared to under €5,000 in Ireland a difference of €8,000.

The evidence is that the top rate of tax in Ireland at 52 (55 per cent for self-employed) is not out of line with other EU and OECD countries. What is unusual is that it applies at a very low level of income by international standards.

A major reason for the relatively low direct tax burden in Ireland is that PRSI is lower here.

In many countries PRSI funds pay-related unemployment and pension benefits while the Irish system provides flat-rate benefits only. Irish employees (and their employers) have to fund supplementary pensions separately. For example, Irish employees pay about €2 billion (after tax relief) towards their pensions annually. In many high tax countries such as Sweden and Belgium, these are funded through the tax system.

If we look at the tax burden (excluding PRSI), the tax paid by a single person on half average earnings in Ireland is 25th highest in the OECD while the tax paid by a single person on two and a half times average earnings is the 5th highest in the OECD. At average income levels we are the 15th highest in OECD. At the top level our tax is below that in Denmark and Iceland but ahead of that in Norway, Sweden and Finland and is over one-fifth higher than the UK.

Nordic model Some commentators point to the "Nordic model" of relatively high taxes and public expenditure as one we should aspire to. To reach Nordic levels of income taxation (including PRSI) everybody in Ireland would have to pay more but the increase would bear most heavily on the bottom half of the income distribution. For example, if the tax rates in Ireland were at the average of the 5 Nordic countries a single person on half average earnings would pay an additional €3,200 per year and a single individual on two and a half times average earnings would pay about €2,000 more.

When resources are limited difficult choices must be made. How much more the better off should pay in taxes is a matter of political choice. However, fairness requires that people on the same income in the same circumstances should pay the same tax.

This suggests that employees and self-employed should be entitled to the same tax credits. The denial of the PAYE tax credit bears particularly heavily on self-employed people with low incomes. For example, a self-employed person on income of €15,000 pays almost 6 times as much in tax as an employee on the same income.

The liability of the self-employed person on that income is €2,350 compared to €400 for the employee. In addition, a higher rate of USC applies to those who have non-PAYE income that exceeds €100,000 in a year. The rate of tax that applies should be determined by the amount of income rather than the form in which it arises. Dr Donal de Buitléir is director of publicpolicy.ie

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Analysis: Ireland is in line with its peers when it comes to tax

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Wilbur Mills who was chair of the powerful US House of Representatives Ways and Means Committee for 17 years said "Don't tax him. Don't tax me. Tax the man behind the tree" to describe his experience of people making spending proposals to him that others would pay for.

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Apple's Irish tax deals 'constituted State aid'

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The European Commission has said that two tax arrangements agreed between Ireland and the US computer giant Apple amount to illegal State aid.

The commission released a letter that the EU's Commissioner for Competition sent to the Government in June formally giving its reasons for opening an investigation into Ireland's arrangements with Apple.

The regulators said it is their "preliminary view" that deals entered into between Apple and the Irish tax authorities in 1991 and 2007 "constitute State aid" and therefore breached the 28-member EU's rules on a free internal market.

Commissioner Joaquin Almunia stated in the letter: "The commission has doubts about the compatibility of such State aid with the internal market.

"The commission is of the opinion that through those (tax) rulings the Irish authorities confer an advantage on Apple.

"That advantage is obtained every year and ongoing, when the annual tax liability is agreed upon by the tax authorities in view of that ruling."

The commission asked Ireland to provide further information about the deals, which have benefited Apple since 1991.

The Government has strongly denied there was any preferential deal with Apple and has vowed to contest any ruling against the State in the European courts.

However, Apple would be required to repay potentially billions in restitution if found at fault.

According to the European Commission, the way Apple's Irish operations were to be assessed for tax may have been manipulated in order not to jeopardise Apple jobs in Ireland.
Jobs may have been factor - EC
During an interview between one of Apple's tax advisers and the Irish tax authorities in 1990, the adviser "mentioned by way of background information that Apple was now the largest employer in the Cork area with 1,000 direct employees and 500 persons engaged on a sub-contract basis".

The interview recorded the tax adviser as stating that Apple was "at present reviewing its worldwide operations" and it wished to "establish a profit margin on its Irish operations".

The letter contended that Apple negotiated a "mark up on costs" at one of its Irish subsidiaries, Apple Sales Ireland (ASI), for tax purposes "in order not to prohibit the expansion of the Irish operations".
Blog: Tax probe could upset the Apple cart for Ireland
The European Commission's investigation centres on tax arrangements put in place for two subsidiaries of Apple, namely Apple Operations Europe (AOE) and Apple Sales Ireland.

It focuses on the practice of transfer pricing, or the artificial shifting of the profits of subsidiaries between jurisdictions in order to attract a lower rate of corporate tax.

The higher the level of taxable income attributed to Apple's Irish branches, then the lower the overall tax Apple would pay, because Ireland's corporate tax rate was significantly lower than elsewhere.

Transfer pricing is acceptable according to international standards, so long as it is done "at arms' length", according to officials familiar with the process.

This means that the arrangements should not favour one company over another.

The European Commission contends that if "arms' length" was not applied then it could amount to illegal state aid from the Government to Apple.

The letter published by the commission is based on information sent by the Irish authorities to the commission since the issue was first raised in June 2013.

It records details of negotiations between Apple and Revenue dating back to 1990.

The commission quotes an internal Revenue note from 1990 concluding that Apple's tax advisor was "clear that the company was engaged in transfer pricing".

The note recalled that Apple's Irish subsidiary showed a net profit in 1989 of $269 million on a turnover of $751m.

The Revenue note concluded: "No company on the Irish Stock Exchange came close to achieving a similar result."

According to the commission investigation, the Irish tax authorities were willing to negotiate a level of profit for the Irish branch of Apple "based on a percentage of the actual costs attributable to the Irish branch".

The amount for 1990 was 46%, more than double the figure of between 10% and 20% "which is normally attributable to a cost centre," according to the commission.

Following further negotiations between Apple and Revenue, the figure was increased to 65%.

It argued that the allocation of profit for tax purposes was "negotiated" rather than through the use of a "pricing methodology".

It stated that the basis of allocating profit was "not done in a reasoned way".

Revenue officials are also quoted as considering a figure put forward by Apple's tax adviser of between $30-$40m, which would be attributable to "manufacturing activity" on the basis of an annual profit of $100m in 1990.

Revenue reportedly asked Apple's advisor as to the basis of this figure. A note of the conversation showed that Apple's advisor "confessed that there was no scientific basis for the figure".

The letter also refers to so called Advance Pricing Agreements (APAs), which are agreements between companies and tax authorities on how transfer pricing arrangements will work into the future, and sometimes referred to as "letters of comfort".

The commission noted that in most EU countries these agreements would last for between three and five years, but in Ireland's case ran from 1991 and 2007 when Revenue revised its agreement with Apple.

Meanwhile, British Prime Minister David Cameron has criticised Ireland's tax regime for multinational companies and welcomed international measures to curb schemes such as the "double Irish".

It uses payments between related parts of a multinational company to shift income from a higher-tax country to a lower-tax country.
Apple denies 'selective treatment'
In a statement, Apple denied it received "selective treatment".

It said: "Apple has received no selective treatment from Irish officials over the years.

"We're subject to the same tax laws as the countless other companies who do business in Ireland.

"To continue that growth and the benefits it brings to the communities where we work and live, we believe comprehensive corporate tax reform is badly needed."

Meanwhile, Minister for Justice Frances Fitzgerald has said the Government is "very confident" that it did not grant illegal state aid to Apple.

Speaking at a meeting of the Global Alliance against Child Abuse Online in Washington DC, the minister said the Government would fight the accusations as long as necessary.

She said this letter was just the beginning of further legal proceedings and the Government would be making its case.

Ms Fitzgerald said the Government was very confident that it did not breach any rules.

Elsewhere, the Chief Executive of the American Chamber of Commerce Ireland, Mark Redmond, has said the Government has been very clear on its approach to winning business.

Speaking on RTÉ Radio's News at One, he said: "We really welcome the Government's statement that they are confident there has been no state aid breach and that they will defend all aspects vigorously.

"The Government have been really clear and Minister [Michael] Noonan has particularly been very clear that Ireland will continue to compete fairly but will continue to compete to win for the really tough job to attract jobs here."

Tánaiste Joan Burton has said that Ireland had cooperated with various authorities, including the OECD and the European Commission, who had raised issues regarding Ireland, tax policy and international tax competition.

Ms Burton said Ireland would continue to cooperate in full, adding that at this point she did not want to prejudge the outcome of any enquiries.
Flanagan says Government will defend position vigorously
Minister for Foreign Affairs and Trade Charlie Flanagan has said that the Government intends to "robustly defend" its position in relation to the accusations made by the European Commission about tax arrangements for Apple in Ireland.

Speaking in Washington DC after attending the swearing-in ceremony of the new US Ambassador to Ireland, Minister Flanagan said the Ireland would "vigorously rebut any adverse assertions" that have been made.

He said there was a process under way with the Commission, but that Ireland would have an opportunity to "state our case and to defend our position".

He said ultimately there would be a report on the matter which the Government would await.

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Apple's Irish tax deals 'constituted State aid'

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The European Commission has said that two tax arrangements agreed between Ireland and the US computer giant Apple amount to illegal State aid. The commission released a letter that the EU's Commissioner for Competition sent to the Government in June formally giving its reasons for opening an investigation into Ireland's arrangements with Apple.

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Government to scrap tax break for property investors in Budget

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The capital gains tax exemption was introduced in Budget 2012 to encourage investment in property when the market was at it weakest. Under the tax break, anyone buying commercial property and holding it for seven years was exempted from the standard 33pc capital tax gain charged on profits.

The tax break was not intended as a long term measure and was controversial because it was seen to encourage money into property potentially at the expense of other sectors.

Online Editors

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Government to scrap tax break for property investors in Budget - Independent.ie

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The capital gains tax exemption was introduced in Budget 2012 to encourage investment in property when the market was at it weakest. Under the tax break, anyone buying commercial property and holding it for seven years was exempted from the standard 33pc capital tax gain charged on profits.

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Ryanair increases its earnings outlook

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Ryanair predicted it will reach the upper end of its earnings projection this fiscal year.

The airline expects to transport more passengers, and an overhaul aimed at attracting more business- minded clients is also due to take hold. Profit for the full year will be at the upper end of a guidance of €620m to €650m, Ryanair said in a statement at its AGM.

The outlook depends "heavily" on yields in the second half, according to the carrier.

The company predicted traffic will rise to 87m customers this year, compared with a previous guidance of 86m. The airline signed an order for as many as 200 Boeing 737 aircraft this month as it pushes expansion in Europe, benefiting from the woes of established legacy carriers such as Lufthansa and Air France-KLM, which are struggling to make money on shorter routes.

"While still too early to be confident about H2 [ the second half of the fiscal year], fares and yields, the continuing strength of our forward bookings and the improving customer experience leads us to cautiously raise our full year traffic forecast to 87m customers, and our full-year profit guidance towards the upper end of our current €620m to €650m range," said CEO Michael O'Leary.

"However, the full year profit outturn continues to be heavily dependent on H2 yields over which we have very little visibility at present. We will give an update on Q3 yield performance at our half year results announcement in early November."

Ryanair shares reached €7.49 in early trading on the Iseq, before finishing the day up 9c to €7.39 in Dublin.

Mr O'Leary added: "Our customers and our shareholders have responded favourably to our improving customer experience, our better digital platform and the positive initial uptake of our Business Plus service.

"We now expect slightly stronger traffic growth in the winter schedule, as we open new bases in primary airports at Cologne, Gdansk, Glasgow, and Warsaw Modlin, as well as significantly increasing flight frequencies and schedules from Dublin to UK cities, and from Dublin to European capitals."

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Ryanair predicted it will reach the upper end of its earnings projection this fiscal year. The airline expects to transport more passengers, and an overhaul aimed at attracting more business- minded clients is also due to take hold.

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Irish people pay highest tax on wine in Europe.

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The report, published by the Irish Wine Association, also shows a decrease of wine sales of almost 10% last year.

The IWA that represents wine importers and distributors in Ireland has warned that excise is the number one threat to the wine industry.

Its annual Wine Market Review for 2013 shows an 8.2% drop in wine sales over the previous year.

A graphic published in the report shows Ireland has the highest taxes on wine in the EU, at €3.48 on a 750ml bottle.

Britain has the second highest tax on wine, at €2.68, followed by Finland at €2.77.

However, 15 countries pay no tax on wine, including Germany, Austria, Italy, Greece, Spain, and Portugal.

The report points out Spanish tourists pay almost twice the price for wine in Irish restaurants than they do at home.

The IWA says last year's excise increases must be reversed because they were causing significant cash-flow problems for small businesses and putting thousands of jobs at risk.

The report outlines the impact that the 62% excise increase on wine has had over the last two budgets.

It says distributors and importers are spending an extra €17,958 in taxes on every 1,000 cases, creating massive cash flow issues for small to medium sized enterprises.

Last year, the industry paid €302m in excise to the Exchequer, with wine sales generating more than 30% of alcohol tax receipts. The IWA says this is a disproportionate share of the tax burden. According to the report, consumers spend €4.86 in taxes on a €9 bottle of wine, up from €3.53 in 2011.

The report also looked at the consumption habits of Irish wine drinkers and found they prefer white to red, with white holding a 51% volume share.

There has been a shift from red to white since 2003, when red wine had a 52% volume share.

More men (76%) than women (70%) over the age of 35 now drink wine, and Australian and Chilean wines are the most popular.

Michael Foley, chairman of the Irish Wine Association and sales and marketing director for Finlater Wine and Spirits, said it was an "extremely challenging" time for the wine industry.

Ireland's high excise rates had hit consumers' disposable income and put off tourists from returning to the country.

"The message coming from the industry is clear: reverse excise increases and support thousands of small businesses and jobs across the industry," said Mr Foley.

He said more than 1,100 people were employed directly by wine distributors and importers, with thousands more supported in the 13,000 pubs, restaurants, and independent off-licences that sell wine.

He said the vast majority of the jobs were in small, family-operated businesses across Ireland.

According to the report 22 litres is the average wine consumption per adult and 75% of the wine purchased in Ireland costs between €7 and €10.99 a bottle.

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Irish drinkers pay highest taxes on wine in Europe

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The report, published by the Irish Wine Association, also shows a decrease of wine sales of almost 10% last year. The IWA that represents wine importers and distributors in Ireland has warned that excise is the number one threat to the wine industry.

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no more discrimination on male and females insurances.

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The European Court of Justice has ruled that setting insurance premiums on the basis of differences between men and women is discriminatory.

Insurers claim the judgment means that in Ireland and other EU member states, female drivers could face a significant rise in car insurance rates, with a fall in rates for men.

The judges ruled that using differences between men and women as a risk factor in setting premiums for car and medical insurance and pension schemes breaches EU rules on equality.

The verdict - which applies from December 21 2012 - will force changes in the current standard practice across Europe of basing insurance rates on statistics about differing life expectancies or road accident records of the sexes.

Until now, discrimination in setting insurance rates has been explicitly permitted under EU equal treatment rules, 'if sex is a determining risk factor... substantiated by relevant and accurate actuarial and statistical data'.

But today the judges followed advice from the court's Advocate-General that 'higher-ranking' equality provisions set out in the Charter of Fundamental Rights of the Lisbon Treaty must now apply.

Insurance companies can carry on discriminating between the sexes until December next year - the time when current EU equality rules are due to be reviewed.
Ruling will affect life insurance costs
Conor Faughnan of AA Roadwatch said the ruling was a triumph of equality over fairness - and would result in the systematic over-charging of women young women to subsidise male drivers.

The decision will also affect life insurance policies - for which women generally pay less - and the cost of buying an annuity, or annual pension. At the moment women pay more than men because they live longer. Jerry Moriarty, policy director of the Irish Association of Pension Funds, said all pensions would cost more - but particularly for men - because of the court's ruling.

Mike Kemp, chief executive of the Irish Insurance Federation (IIF) said the it was disappointed by the ruling. Mr Kemp said that removing the ability to take gender into account where relevant would ultimately have negative consequences for consumers across the board.

'Insurers have always priced risk objectively based on statistical evidence and there is no reason why this process should be interfered with,' he said.

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Insurance sex discrimination illegal - EU

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The European Court of Justice has ruled that setting insurance premiums on the basis of differences between men and women is discriminatory. Insurers claim the judgment means that in Ireland and other EU member states, female drivers could face a significant rise in car insurance rates, with a fall in rates for men.

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87% of hotels have seen an

increase in business this summer