Food for thought: three interesting articles about multinationals in Ireland

Susan
By Susan September 14, 2011 15:18

Food for thought: three interesting articles about multinationals in Ireland

 

As an addition to my recent post on exports and multinationals, I wanted to draw your attention to some more information…

 

Are multinationals here to stay?

 

This article by Ronnie O’Toole  was published in the Irish Independent in… 2008! Its title: “Multinationals’ love affaire with Ireland offers more than a fling”. Interesting…

And it looks like Mr. O’Toole was indeed right: a worldwide recession later, multinationals are still happy to invest and settle down in Ireland.

To sum up, here are a few of the points he makes:

– the fear that over-reliance on multinationals is dangerous was proved wrong. “The subsequent take-off of the Irish economy was based almost entirely on (…) foreign investment”.

– the fear that multinationals would only do basic processing in Ireland was proved wrong, too. The emphasis on R&D and the knowledge economy has been extremely beneficial to Ireland.

– and, compared to what the situation was in 1980, it looks like our efforts to attract and retain multinationals have been not only worthwhile but very successful! “Looking back on 1980 now, it seems painfully clear that the problem with the Ireland/multinational relationship lay squarely with us, not them. Foreign multinationals only did basic processing here in 1980 because Ireland was a truly dreadful place to do business. The government was unstable, its fiscal position was deteriorating on a monthly basis, we were haemorrhaging skilled labour and our prices were out of control.”

 

What would be the consequences of a raise in the corporate tax rate?

 

Another interesting perspective is that of Chris van Egeraat, writing at the “Ireland after NAMA” blog in November 2010. He tackled the issue of a raise in corporate tax and argued that in the short term, such a raise would not have the effects that were expected of it.

The main points of his argument:

– European partners have advocated a raise in the Irish corporate tax rate, in order for Ireland to increase its tax take and reduce its deficit.

– But in the short term, such a raise would be totally ineffective to increase the tax take, as a lot of foreign firms’ activities in Ireland have to do with intellectual property and intra-firm financial services: those would be extremely easy to relocate elsewhere quickly if firms didn’t want to pay the augmented rate.

– Such a hike in the tax rate would also hurt Irish indigenous industries.

– Chris van Egeraat makes an interesting point towards the end of his article: a raise in the corporate tax rate might be advisable at a later date, he says. “If we want to develop a sustainable economy we will need to adopt a strategy that will eventually involve a proper level of taxation. Very few equitable societies are built on a low taxation model.”

– He also alludes to all the other advantages that Ireland has to offer: “But I don’t buy this idea that, even in the long term, Ireland can only be competitive on the basis of a low level of corporation tax, or other taxes for that matter.”

 

Ireland, a tax haven?

 

Chris van Egeraat links to this article in the Irish Times: “How Googles dines on ‘Double Irish’ or ‘Dutch Sandwich'”.

This article takes the example of Google to explain how big US multinationals use shady but totally legal tactics to pay less taxes and protect their profits from US taxes…

Who would have thought that Ireland was a tax haven?!

 

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Susan
By Susan September 14, 2011 15:18