Island tax havens?

Mayo’s islands could be tax havens

Neill O’Neill

ÚDARÁS na Gaeltachta have proposed a radical plan to the Commission on Taxation, recommending a special tax incentive scheme for offshore islands. However, this will not include Achill or other islands which are connected to the mainland by roads and bridges.
The plan by the regional authority – who are responsible for the economic, social and cultural development of the gaeltachtaí – aims to promote economic activity on our offshore islands, including those not in gaeltacht regions, to attract individuals to live on them. The Údarás proposal includes a pilot scheme that would give an exemption from income tax to individuals whose principal residence is on an island, regardless of whether they work there or on the mainland.
The suggested tax-exempt threshold would be in respect of a maximum annual income of €100,000, and the exemption would apply for a period of ten tax years. This exemption would also apply to both new and existing businesses on the islands, and the major beneficiaries in Mayo would be the 200 residents of Clare Island and Inishturk.
The proposal also suggests having 100 per cent capital allowances/free depreciation write-off for any equipment or buildings provided for use in a business on the islands, and calls for tax relief for people who invest in island-based businesses and a VAT refund scheme for community-based activities and organisations where capital expenditure on buildings is necessary.
Clare Island Development Officer, Donal O’Shea, is hopeful that these plans will come to fruition, and would be happy with them on a smaller scale rather than have them dismissed outright. He also says that the Government have considered the possibility of making the islands tax-free in the past.
“Around 1994 we discussed it at length on the Aran Islands and, in my present capacity as Development Officer on Clare Island, I wrote to Brian Cowen when he was Minister for Finance prior to two budgets about some tax incentives for islanders, and while he said he’d consider them he obviously never did,” said Donal.
“The cost of living is about 40 per cent higher on an island than it is on the mainland and even if the taxes islanders had to pay reflected and compensated for this it would be a great start. I also feel that a scheme to lure companies to the islands through tax incentives – like the Government did nationally in the 1960s and 1970s – would be a great thing for the islands and would go a long way towards securing the future of our offshore communities.”