Top consultants criticise Cowen

A TOP consultancy group has condemned Finance Minister Brian Cowen for his failure to deliver any initiatives to relaunch the Irish Financial Services Centre (IFSC).

December 2005 marked the end of the first phase of the IFSC and consultants Deloitte & Touche warned attracting new investment to the centre will become increasingly difficult as other centres challenge for inward investment.

To survive the competitive environment of the financial services world we must always be “first in class” in every aspect of our regime, they said. Corporation tax of 12.5% was very appealing but other ways have to be found to keep the IFSC attractive to investors.

Deloitte & Touche tax partner Paul Reck said: “The Government was slow to respond to tax breaks for aircraft leasing and Ireland lost out for several years in that area.

That was regrettable given that GPA led the world in this field for so long, he said.

Overall, Mr Reck said the Government should have indicated clearly at this stage that it was planning a series of initiatives to clearly indicate to the financial services sector it had its finger on the pulse.

“There was a whole range of measures the Government could have announced that would have given a clear message to potential investors that investing in the IFSC would be in their interest.”

Deloitte also condemned abolition of the remittance basis of taxation on employment.

That move has put the economy at a serious disadvantage because it will deprive us of top-calibre executives from overseas companies who might otherwise come to work here for a time. It will, in effect, cause a loss of brain power to the country, said Deloitte of the Finance Bill.

The system allowed people working here on behalf of overseas companies to pay tax only on the money paid to them in Ireland.

The rest of their earnings were not liable for tax and it made moving to Ireland a very attractive proposition for high-calibre people that could have a major impact on our business fortunes, said Deloitte.

They also attacked the proposed implementation of some taxes on a retrospective basis. That was contrary to a taxpayers right to know his precise tax liability in any given year.

That “legitimate expectation as regards certainty in the tax code was now gone and it created an unfortunate precedent”.