By Paul Clancy, Chief Executive of the Londonderry Chamber
The North West business community is unique. Given our proximity to the border, many businesses here straddle two different jurisdictions and face the challenge of contending with contrasting regulatory frameworks daily. With challenges comes opportunities, however, as employers here look to utilize the vast talent pool available from across the wider region as they bounce-back from the pandemic.
In our experience, many Chamber members are cross border workers themselves, or employ them. Our strong relationship with our colleagues at the Letterkenny Chamber reflects the shared goals and objectives that we hope to achieve through cross-border collaboration. To promote economic prosperity across the North West City Region, though, it is imperative that tax regulations are fair, harmonised, and grant cross-border workers the flexibility they need to meet the demands of the local economy.
This flexibility, however, is currently not attainable. Irish home-working tax rules mean that, if Republic of Ireland-based cross-border workers perform any work-related activities from home, be it checking an email or taking a phone call, their income faces a ‘double tax’. This means that cross-border workers often must take unnecessary, often long, commutes into the office to perform ta task that would have taken mere minutes at home.
These personal tax rules were suspended for the pandemic but are set to re-introduced from January 2022. The ‘double tax’ burden for those who work remotely makes it very difficult for local employers to attract and retain skilled workers who live on their doorstep and must be addressed urgently. Home-working flexibility is now a mainstay of modern working practises, and despite urgent calls from the Cross Border Workers Coalition, border businesses may be forced to deny remote working opportunities to their ROI-based employees from next year. This simply does not work for our local business community.
Border areas like the North West have proven very attractive for Foreign Direct Investment in recent years. From FinTech to cyber security, we continue to build on the Letterkenny-Derry digital corridor which has brought many high-paying jobs and opportunities for skilled workers across the island. Yet, the attractiveness of border areas as an FDI location could be jeopardised by these home-working tax rules, as they do not allow for flexible working practises that reflect modern, international jobs.
Irish Budget Day is October 12, and Finance Minister Paschal Donohoe TD has the chance to introduce permanent, positive change for cross-border workers across the North West. A long-term solution to this cross-border tax issue will not only incentivise companies to invest in our border regions, but will also encourage remote workers to return to the North West, spending their disposable income in local shops, restaurants and boosting the local economy.
The Londonderry Chamber supports the proposals of the Cross Border Workers Coalition and calls for urgent action from the Irish Government to address these damaging cross-border tax laws.