Why does the IDA want lower income taxes?

[Cross posted from Right To Know]

Earlier this year a newspaper report indicated that the IDA was lobbying against higher income taxes claiming that high income tax was making it difficult to attract foreign investment and was hitting job creation.

In August last year we submitted an FOI request looking for the analysis to back up these claims and all records of any lobbying in respect of income tax and social security rates in Ireland.

The IDA said that it continually analyses personal taxation and social security and how it influences FDI in Ireland and pointed to various methods including a 2015 survey by KPMG, a report from the Tax Institute and engagements with stakeholders, clients and staff. Specifically IDA undertook research in 2016 to identify reasons why some companies who considered Ireland chose to go elsewhere. According to the IDA, personal tax was among the reasons why they did not choose Ireland.

However, none of the underlying records were identified or released.

All IDA provided were redacted copies of 2017 pre-budget submissions calling on the government to reduce the top rate of income tax from 52% to below 50% and to set out a road map of income tax reductions up to 2020.

Tax rates are a big public interest issue. Taxes are used to fund public services (including the IDA it must be noted). With lower tax rates there must be an objective analysis of the trade-offs that are being made. While nobody necessarily wants to pay more tax – a public body such as the IDA would be expected to be sensitive to the bigger issues at play when it calls for tax cuts. In particular there must be a clear public benefit based on objective analysis so that the IDA position is substantially more than mere lobbying on behalf of big business.

We believe that the IDA must disclose its tax analysis and identify the interests that are driving it to intervene in the public debate over tax rates. To that end we are not satisfied that so much information has been withheld and have now filed an application with the Information Commissioner to review the IDA’s decision to keep the bulk of its information supporting its position on lower taxes from public scrutiny.

The Information Commissioner has invited us to make a submission in early January and we expect him to make a decision shortly after that.

We will keep you posted.

Here is IDA’s response: