David McWilliams: Ireland should give a special tax rate to expats

The economist suggests we use the Dutch strategy of attracting 'decision makers' with a lower rate of tax

David McWilliams: Ireland should give a special tax rate to expats

David McWilliams is pictured at the National Library in Dublin in 2012 | Image: RollingNews.ie

Economist David McWilliams says a special tax rate for expats moving to Ireland could be the way forward.

The broadcaster and author was speaking to Ivan Yates on Yates on Sunday.

"With respect to the marginal rates of taxation, if you're trying to get in people who make decisions in these big corporations, not so much just 'We're going to get people in here and we're going to provide back-office workers at above the minimum wage' - that's useless, that's not for us, we're a bloody expensive country.

"We're a wealthy country, we've got to have a wealthy strategy.

"We have to say 'if you come in here, we want your decision makers'. And if they say 'our decision makers would love to leave Hong Kong, or Britain, or Holland... but your marginal rate of taxes are too high', we would say 'Ok, we have zero (money from decision makers) at the moment, so why not do what the Dutch do?'

"Holland is a very interesting, innovative country - and it's not a basket case and it's not a banana republic - it's a proper, sophisticated country.

"They have a special tax rate for expats.

"They say 'You come in, you pay 30% of your top income'. It's an expat deal.

"Now, we should do exactly the same. The reason I say we 'start at zero' is because people say 'Well, they're being treated differently to us.' And I say 100% of zero is still zero.

"If you can get in 50 new corporations, then you begin the process of changing the story".

Corporation tax

He says Ireland should take shares in US corporations based here, rather than a tax bill.

"I think the relationship between the nation state, us, and the corporate world is going to change over the next couple of years.

"We have to come up with something quite different".

McWilliams says we either have to chase big corporations based here to pay their full tax bill, or do something else.

"I believe we have an amazing opportunity... Say to the American (corporations) 'You make 100bn in profits, you pay 4bn, there's 8bn missing, why don't you pay us the rest in stock?'.

"We take shares in their company and we put it into a sovereign wealth fund".

Brexit opportunities

Referring to recent elections in the US and UK, which saw a rise in the Labour Party vote, he said: "If you think globalisation means trade, trade is always good for any country - but it's not always good for everyone in every country.

"People get displaced, people's jobs go south, factories move, etc - so unless you have a mechanism in the globalisation framework to redistribute income to people who lose out, then what you'll do is you'll find the political pendulum will swing - and rightly so.

"We're seeing this all over the world, and it's not just austerity.

"But austerity hits poor people much more than rich people - that is the basic fact that needs to be drummed over again and again.

"Poor people depend on the welfare state more than rich people; and if the welfare state is cut back they suffer.

"Then they feel they don't have a stake in society, and over time increasingly if they don't have a stake they have one thing - they have a vote."

On Brexit, McWilliams has a simple message: "We should be looking at Britain's uncertainty, insecurity and instability as a one-off opportunity to actually open our doors.

"When investment decisions are taken, they tend not to be reversed very quickly - so it's absolutely crucial that we look at this year - two, could be three years - as a one-off golden opportunity".

On the housing issue, McWilliams says the Government needs to be prepared to build low-cost homes at a loss to the State.

"It has to change the market psychology, totally", he said.

Additional reporting: Liz O'Malley