Our corporation tax is in play. Our ‘beggar thy neighbour’ policy was the key factor in the success of the original Celtic Tiger.
I heard Will Hutton on radio saying that we should take a loan from Her Majesty’s government, but that it would come with strings attached - namely we would no longer undermine the UK exchequer via corporation tax. Now it looks like other europeans see this opportunity…
Probably correct. They’ll bump up the rate to the next lowest rate as a fig leaf but all the transfer and brass plate operations that dont directly benefit EU area banks, insurance and pension funds will be squeezed out. The EU high yield operations will survive but they are the ones that produce the least direct benefit to the wider economy. Almost all net zero operations so no corp tax and only need a small number of people to administer the immense cash flows.
Ireland’s corpo tax is still an anomaly in western Europe, where it hurts…
In a wider European context, only Cyprus’ is lower than ours in the euro zone, and Bulgaria’s in the EU, both at 10%. Most Eastern European States have it at 15-19%.
Now, who were the cocky b*****s walking the corridors of Europe, shouting “we’re the wealthiest country of Europe, we know better how to make money…”
Time to eat humble pie for us. We stepped on too many toes in the last decade over this tax…and now the owners of those toes have to bail us out.
My guess, Ireland’s corpo tax is going to be around 16% within 2 years. Like the bailout, it’s not a matter of IF, but when, by how much, and how fast. Talk of keeping our corpo tax as it is now, is reminiscent of the denialism we saw around the property market, IMHO.
Much of what would happen if the corpo tax rate was raised even 2.5% is not known. People haven gotten awfully emotional about it. The 2.5% rise could yield a half billion which could pay for our children’s hospital but invariably the people that are so intent on keeping the mythical tax rate would rate a public hospital low on the list of priorities.
Do you have any dealings with foreign companies established here? I do and I can tell you that thyy’llbe making plans to move. Approx 150K are employed by foreign companies here. Add the same again for the jobs that those 150K create and you get some idea of the carnage that would ensue if they were to fuck off. What industry are you working in?
I think part of the problem is ‘certainty’. If it is no longer untouchable, then the fear is that it will creep up. This changes future planning decisions. I would expect that companies considering investment in Ireland are holding off until they are sure that low corporation tax is safe. Hell, it’s possible that a portion of the increase in this year’s tax collections reflect the fear about the rate.
I’ve heard an opinion that the multi-nationals woud not shut up shop overnight but chances of upgrades to plants/technology (this relates to pharmas) which tie them longer term to Ireland would go to cheaper emerging economies.
So long-term yes it would be detrimental.
The amount raised by increasing it by 2.5% would easily be offset by those leaving. They’d see it as a trend and they’d be right. We do need to wean ourselves off FDI but now would be the wrong time to do it (but of course that may be out of our control). MNCs are very mobile.
Also don’t forget that it would have an effect on Irish owned companies. The last thing so many of these companies need is further costs resulting in further layoffs. That having been said, it’s a pity the low CT could not have been more targeted in the begining a la export sales relief in the past (not a runner with the EU).
The guys with a physical operations will not shut up shop immediately. It would be a slow draw down. But as a very large chunk (maybe 80%+) of the “redirected revenue” is not tied to a particular physical presence that could be mostly gone by the end of the next financial year. To take just one example, just how long do you think it would take Microsoft to move their brass plate Dublin operation which accounts for at least $20 billion p.a somewhere else?
A better example are the Belgian pharmas. If I remember correctly two have real presence, one an almost real presence and the others are pure twenty guys in an office “managing” billions in annual revenue operations. The majority of revenue for all the Belgian pharma operations in Ireland are “twenty guys” type so they will bugger off in short order if there is no tax or regulatory advantage to staying in Ireland. There would not be a big change in tax revenue for Ireland (they dont pay that much - far fless that 12.5% of gross) but there would be a very noticeable decline in exports / GDP numbers which have been greatly inflated by the MNC brass plate operations in Ireland.