More on Corporation Tax

The FT carries an article which highlights that some (unnamed) officials elsewhere in Europe think that raising the corporate tax rate should be part of the deal. One quote

“They need lots of money and we note they have a corporation tax rate that is very low,” the official said. “Supply must follow demand.”

It may be helpful to reproduce the table I posted last week: the range of variation in  corporate tax revenues to GDP is not that large across the OECD (except for oil-rich Norway). Given the importance of a pro-growth plan and the downside risks to the export sector of varying this tax rate, it does not seem wise for the international debate to focus on this topic.

Corp Tax

57 replies on “More on Corporation Tax”

It is difficult to believe that the EU/IMF would be so short-sighted as to destroy our main driver of growth for short-term gain and political point scoring, but the stupidity of politicans everywhere knows no bounds.

Vie is it zen zat all zoes companie ent up in Irelant. Zer ist kleerly nein iffernce in zee tax. Maybee ist because eet ees kloser to ze US?

well if they are that thick the whole edifice will come tumbling down and we will fall back into the arms of the could be just ff bull to make it look like they won a victory.either way it will be a difficult few years trying to retain it.what was that sucking sound ross perot talked about in 1992?

It is a fair point for a German on the minimum wage of what 2-3 euros and hour to complain that they have to chomp up to bail out a country with a minimum wage twice that…

Hi Philip,

A good point to make. But surely the issue is not the revenue raised, but the role of the tax itself in attracting investment. Recalling the Asian crisis bailouts, it is clear that the vast array of conditions imposed on Korea and Indonesia concerning trade and industrial policy had nothing to do with fiscal or financial balance, but were simply from a wish list brought in by the IMF executive board members who had final say on the terms of the bailouts. Is there any reason to expect the situation to be any different with Ireland this time?


I think what bugs the Germans (and others) is tax evasion through the use of fictitious invoices:

The pattern is simple: a German corporation establishes a subsidiary in Ireland. The subsidiary then purchases products from its parent company at cost or just above. Thus, in Germany the company earns little or no profit. The Irish subsidiary then re-sells the goods to consumers at market prices, including consumers in Germany. The profit is therefore made in Ireland and is taxed at only 12.5 percent, In Germany it would have been over 38 percent.

[my translation]


That’s one of the reasons why ‘the range of variation in corporate tax revenues to GDP is not that large ..’ — companies that would normally have stayed in Germany and raised corporate tax revenues in their home country set up shop in Ireland and then a miracle happens: German corporation tax revenue down, Irish corporation tax revenue up and evrybody’s happy except the German fisc (so forget the crap about the atrractions of Ireland’s young and dynamic workforce etc. etc.).

The IMF would probably regard the low corp tax rate as a good pro-growth measure. The ECB won’t care either way, so that leaves the EU Commission. Let’s see what they say about it (from their web site)

The Commission has not proposed EU tax harmonisation and does not believe it is necessary to fix a minimum corporate tax rate. Member States are free to choose the tax systems they consider most appropriate, provided they respect EU rules. The level of taxation in the EU is a matter for individual Member States to decide. However, the Commission considers that the reform of company taxation in the EU is crucial to achieving the goal of making the Union the most competitive and dynamic knowledge-based economy in the world by 2010. In the longer term, companies must be allowed a consolidated corporate tax base for their EU-wide activities to avoid the current costly inefficiencies of 15 separate sets of tax rules.

I imagine what they are saying during the negotiations is “Before the end of the program period a CCCTB will be in place. This will reduce the amount of money that companies apportion to Ireland to be taxed there. We estimate that the reduction in this type of income subject to your corporation tax will be €X. Please incorporate this into your estimates, and make sure all the numbers still add up to our target figures”

While they could be saying “20% corp. tax or no deal”, I doubt it, since they would be on very shaky legal ground at that point.

Or maybe they are just playing poker with Minister O’Keeffe and saying “Whoever wins the next round gets to set the corp. tax rate, OK?”

Three possibilities:
1) They have found a great and obvious wheeze for Ireland that Irish policymakers and economists have somehow missed.
2) They are thick.
3) They are being less than entirely honest in their presentation of their analysis.

I don’t think it’s number 1, but it would be entertaining to hear them try to explain why it is.

I don’t believe FF would be making such a big play of protecting the corporate tax rate if there was not already agreement that it would not be touched.

It is both a sop (from Europe) and the usual misdirection from FF. You all fell for it again (just like NAMA discounts).

What you should be concerned with is elsewhere. Try wondering how 90 billion at 5% is going to replace 124.5 billion at under 2% and turn a profit. Try wondering what it is going to be overcollateralised with (I’ll give you a clue, the semi-states are valued at 100 billion). Try wondering what a 9 billion (the Economist Intelligence Unit estimate) cut/tax raise in the budget will look like.

If it’s a question of raise corporation tax or no deal with the EU, then I think we should take no deal. They need a deal more than we do, and we just can’t afford to risk the futher devastation to the economy that might result if the corporation tax rate was raised.

We can still cut the EU out of our dealings with the IMF. And, even if the IMF is subverted from its mission by EU influence, I think we are getting close to the point where going cold turkey on new public borrowing, resolving the banks, and if necessary suspending debt service and repayments, is as attractive as the other alternatives on offer.


I think you are right. Ff will be able to claim at the budget-if they get that far-that they protected the 12.5% rate. The gullible electorate will gheave a sigh of releif and hopefully not notice the 6bn plus fiscal adjustment.

The (junior) EC official is probably a Grade 3 paperkeeper put there by FF in 1973.

To the degree that our high corporate tax yield (given the low rate) is due to siphoning off investment (real or otherwise) from other EU countries (“social dumping”) this won’t necessarily be that persuasive to them. If you think everyone could attain the Irish revenue yield at Irish rates then I suppose it’s different. In other words if the condition of our revenue being as high as it is is that others maintain their rates at some sub-optimally high level (equivalently, if our adopting a higher rate would allow others to lower their rate without losing revenue) it might seem reasonable to demand that we increase our rate, even – especially? – if this was not expected to increase Irish tax revenue.

Raising the corp tax is not on the table. It never has been in this current chapter of the crisis. It is just a smokescreen from the Brians to make it look like they achieved something at the end of these talks.

I’ve said it before: as much as I don’t like them, the guys behind FF’s spin machine are very, very good at their job. They may not fool the likes of people on this site but they fool most of the people most of the time.

…but they fool most of the people most of the time.

Cannot agree. some of them – I think 18% is the amount.

I meant in the past… getting elected etc. But yeah they are still fooling 18% and as of today, the majority of the electorate don’t really know what’s going on and will say stupid things like ‘fair play to them for keeping the tax rate’ even though it was never under threat.

In the absence of real economic justifications for attacking our low corporation tax rate, this will be seen as a political move where our European partners take the opportunity to kick a small country while it is down. Bravo to the EU if that is what it plans to be. Perhaps abreaction would be the best treatment for the EU’s existential demons.

In general I think Ireland’s problems are the Eurozone’s problem not just in terms of consequences but in causes too – a lot of our suffering can be attributed to problems with the EMU institutional set-up. (To be sure, we failed to make the policy/institutional adjustments in the 1999-2008 period that would have helped us cope with these flaws – mainly because at the time those flaws worked in our favour).

But I really don’t think our corporation tax is something we are entitled to self-righteous about – it’s explicitly meant to work as tax competition (a race to the bottom essentially). We are genuinely entitled to solidarity from our EU/EMU partners, but our corporation tax is not best described as “solidaristic”.

This is a lie.

Pure propaganda.

Corporation Tax will not be touched.

It is put into the debate to avoid the truth.

Deutsche Bank is bankrupt.

German mercantilism has failed.

Germany is trying to export its debts.

Deutsche Bank is bankrupt.

James Conran

“but our corporation tax is not best described as “solidaristic”.”

Nice James. Lovely East European Communist language.

Angela is an East European Communist. You do know that?

Here’s the thing James.

Will Deutsche Bank be “solidaristic”?

Will the East European Communist Angela Merkel admit that Deutsche Bank is bankrupt?

Well, you know what they say about economists and rational expectations. :/ But I think hoganmahew is likely to be right on this.

Other member states face political economy constraints.

Sarkozy said a year or two ago that it is hard to argue to citizens of a high tax jurisdiction should fork over their money to the citizens of a low tax jurisdiction. I would say that he was reflecting the views of a lot of people on the Continent.

Irish people should also remember that our solo run on the suicidal bank guarantee was deeply resented by other European countries.

“Sarkozy … it is hard to argue to citizens of a high tax jurisdiction should fork over their money to the citizens of a low tax jurisdiction.”

Isn’t that technically what happens when a German buys an Irish bond? That’s the problem the money has already been forked over.

Carolus Galviensis Says:
November 18th, 2010 at 9:43 pm

That would be crude indeed! It may happen, but Ireland and Germany are obliged to investigate if the other treaty partner, to the Double Tax Agreement, a treaty, wishes. Anything this simple falls apart easily. The tax paid in Ireland might then be returned, but the deduction in Germany for the purchase, would be disallowed making it ineffective. Charges might follow in Germany. Even genuine matters with real but suspect transfer pricing issues, can be pursued by the Germans should they have suspicions. Perhaps they do not employ enough “Steuer”(?) Inspectors to do this, but the ball is firmly in their court.

Joseph (*Just Joseph!)

I completely agree!

The OECD have a model avoidance of double taxation treaty that coutries use, and mutually adapt in certain details, for their network of Double Tax Agreements. (DTAs) The Model DTA contains provisions on avoidance and ensuring that the correct level of profits of entities (or gains) are taxed in the correct jurisdiction. The HCPs (High Contracting Parties) jointly investigate and agree if there is a dispute. I have to say, in my experience, this has not happened for any of the cases I and my colleagues dealt with at the time, when I was in D16, Lansdowne House, which dealt with Multi-National Entities (MNEs).

Rare, but provision for it exists. As Joseph says, there is much spin about these matters. That might also apply to the German side as to the Ireland side. The Germans might protest, but in response to domestic pressure.


as far as I can see they are bailing out our banks so their banks don’t fail….they took the risk of investing in Irish banks so tough shit!

The left appears to be dead in Europe and here because no one is pointing out that no matter what way you dress it up…..the germans bailing out ireland or whatever… is about the ordinary citizen being forced to save the banks all over Europe whether it be Germany, Ireland or Britain…..we might see a lot of changes if this was readily recognisable by the people!

Sarkozy may face similar domestic pressures, but Regional Aid has always been part of the EU parcel, as it is obvious that with the dismantling of borders and other obstacles, business for the core would pick up. That

they can successfully choose to impose higher taxes there

simply means that businesses that are inelastic in location are trapped and lower personal taxation results? Those that are elastic, will set up elsewhere, even outside the EU, if it suits them. It is not a problem specific to Ireland. What next? France takes taxes from every corporation in the world? Simply seize any articles entering France and hold them against “taxes due”? The Doublke Taxation Agreements all deal with these matters. He is simply posing and appearing tough, prior to going home to his ‘licious missus?

As the tax situation has already been addressed, he is presumably referring to that?

Or spinning!?

De Roiste Says:
November 19th, 2010 at 4:43 am

The whole of the EU is socialist. Look at all the funds and redistribution of money to farmers, BMW region etc. Fabians have designed it and are probably happy wioth all the interference in people’s affairs and the jobs that this brings? Ireland is lucky that way. We would be fighting them off if we were suddenly rich, which is why Norway is not a member?! JHusrt as they share Frau Merkel’s taxes with Ireland today, so will they adjust payments for oil and gas finds tomorrow!

Save the banks? We need some institution to issue cash when demanded and to keep it safe from thieves. These may belong to others, but the banks are ours in almost every respect. We no longer need so many and they need to be reduced in size, but their owners have already been punished. The problem was that instead of being a steady engine for gradual growth and slow inflation (theft!) idiots decided to open the taps full on and more idiots went along with it. They could have been stopped. They weren’t. The only ones taking out money unfairly were those who sold all property prior to that collapse and those on bonuses for trapping as many people in debt slavery as possible. Taxation will deal with both of these, but the pricing disruption in the meantime means massivcew delays in investment and recovery, and of course, a shrinking economy as most of it, nearly, was borrowed! Not real! The economy recognized much of the borrowing as revenue and that caused the tax problem, fiscally.

Kevin O’Rourke Says:
November 19th, 2010 at 2:44 am

Sarkozy surely does not expect a low tax jurisdiction to waste money??

Of course it is only high tax jurisdictions that do that! I think he has logic problems: either France is an empire or it is not. Ireland is not an empire. He presumably will not refuse our oil and gas when it comes onshore? His altruism is suspect. Either Europe demonstrated solidarity and takes a share of the oil and gas, or else it has another Norway on its hands …… They lose all that fishing too.

“Sarkozy said a year or two ago that it is hard to argue to citizens of a high tax jurisdiction should fork over their money to the citizens of a low tax jurisdiction.”

Isn’t it just as hard to argue that the citizens of Ireland which is facing dire fiscal adjustments should fork over tens of thousand of euro per person to banks to repay “foreign lenders [that] still have $170bn (£107bn) invested in Irish banks. Of this total, $46bn has come from German banks, $42bn from British banks, $25bn from US banks, and $21bn from French banks.” This excludes ECB borrowing as I understand it – see linky below.

The banking crisis doesn’t end at our shores. Other countries lent Irish banks their deposits because Irish banks were paying good rates and could find a home for the money in construction and property. Why is a perimeter drawn around the Irish banking system when it is clear that other countries are deeply involved in our crisis and under normal commercial and capitalist rules these foreign lenders would face some writedown in their lending if the borrowers can’t repay. Yes we enacted a law to guarantee some debt but we can rescind laws. In practice the threat of rescinding the guarantee without actually rescinding it should be sufficient to engage in “amicable discussions” – a €46bn bailout by the State to the banking sector should be our absolute red line.

Our solo run on the suicidal bank guarantee was deeply resented by many of our citizens too. It’s understandanble that the EU folks are upset, but that’s no reason to agree to let them slash our wrists after our attempt to slash our own throat proved unduly slow.

European solidarity doesn’t, in the end, seem to have amounted to much. Anybody remember why we joined the euro? Anybody know why we should stay in? Could anything really be worse than this? If there ever was a time for radical alternatives, this, surely, is it.

This is a bargaining situation. Some countries want us to get rid of our 12.5%. Personally I don’t think its role in attracting investment is as crucial as people think. Fortunately the rest of Europe seems to agree with the majority on here.

Therefore I see the value of the rate as a bargaining chip. But the best bargaining chips are useless to us, but useful for someone else. So the more other people think it is important, and the more we realise it is not important, the lower we can negotiate down the bailout interest rate.

Ronan Lyons has a complimentary piece

I continue to be puzzled by the drive of European elites to limit the scope for diversity in taxation systems. As an island off an island with a smallish population, we have to use whatever we can imagine to have a sustainable standard of living for all those who wish to stay here.

Does Luxembourg still have special provisions for holding companies?
Don’t the Dutch have company law provisions that yield some advantages?
Are the Germans still giving subsidies to the coal mining industry?

@Jagdip Singh, BeeCeeTee

But of course. If there is an effective pan-European bank-bailout program, then like any other European program the costs should be shared out among the member states in rough proportion to GDP, or to GDP weighted by this or that – some vaguely equitable and rational sharing of the burden. Imagine if at the next round of CAP negotiations, it was proposed that Ireland should contribute roughly the same absolute amount as Germany. Would the argument “ah, but you’ve always done well out of the EU, you benefit disproportionately from the CAP, and this burden won’t you make as poor as Greece yet strike anyone as a convincing case for this change? Would a loan at 5% for the amount of the contribution make it all right?

However, we’ve horribly compromised our position to advocate for a different way. After unilaterally going out of our way to make Irish bank liabilities into Irish public liabilities, and pushing the notion at home and abroad that Irish bank liabilities are Irish public liabilities and we’ve got it all under control, and persisting in that folly even in September, outside observers could be forgiven for half-believing the things we told them, or at least holding us to our offer to keep the hot potato. Sending in as our negotiators basically the same government which was responsible for both the property bubble and the bank guarantee doesn’t help there either. And to a casual observer the outline of the latest developments is “Ireland screws up, has to ask for help, gets tough-love bailout”. When people have that picture in their mind it’s very hard to convince them that we’re not being treated generously enough.

“Anybody remember why we joined the euro? ”
While I cannot point to any official source, I always assumed that the effort to join the €uro (or more exactly to move from being in a currency union with the £Sterling area to a larger currency union) was based on having the disciplines of currencies managed to keep inflation and interest rates low, in order to ensure competitiveness of internationally traded businesses.

Of course, the governing elite then failed to follow through as senior public servants have now admitted in an NESC Press release
“In the past decade, Ireland’s approach to fiscal policy, prices, costs and financial regulation were not sufficiently adapted to the disciplines of a single currency”

Needless to remark, the IMF did raise this issue in 1999, the year we joined the €uro
““In light of the rapid growth in credit and strong housing price increases, a number of Directors expressed concern about the risks of an asset price bubble and the potential vulnerability of the banking system. Directors stressed the need to enhance the forward-looking aspects of regulatory policy and, in this regard, welcomed the supervisory authorities’ recent initiative to assess the financial system’s vulnerability to specified macroeconomic shocks. They felt that a peer review, particularly by supervisors from a country that had undergone a real estate boom, might be helpful”

As I cannot find any reference to this peer review in the Honohan or Regling-Watson reports, I assume this review was not done. The panicky policy-making since 2008 shows gross incompetence in high places in the governing class.

Joining the €uro was not meant to provide cheap finance so that we could sell ever more expensive property to one another.

Having joined the €uro,

I see that all contributors are not as convinced as the Tanaiste that the corp tax is “not-negotiable” and not going to change.
The fact that the King has no clothes does not yet seem to have dawned on government.

I find it hard to see how the Europeans can leave a credit line of up to €100 billion and go back home with nothing on corp tax. There may be an agreement to defer raising it but there is no doubt that it is part of the negotiations, sorry, discussions.

I do hope that the Anglo Austrian bank subsidiary and its “private” clients is thrown into the mix if the Austrians start pounding the table.

I would expect the IMF to push for more than €6billion. The IMF spokeswoman on RTE last night did not flinch one bit at the prospect of higher taxes reducing growth. The lemon would have to be squeezed to fill the bowl.
Your figure of €9 billion would appear to be closer to the mark.

I don’t understand why collateral will be required for the loan? Does it have to be collateralised?

@Donal O’Brollachain.
re: Don’t the Dutch have company law provisions that yield some advantages?
We could invite Bono to fill in the EU on this one.

Jagdip what you are suggesting would involve losses to the Private sector. I.e. The owners of Bonds mostly large corporation profit managers.
You know what happens when this is threatened. They attack the country by selling that countries bonds and then that causes a panic and the government backs down. Financial terrorism.

People who are calling for Ireland’s 12.5% rate to be maintained need to keep two things in mind.
The share of government income contributed by corporate profits has been decreasing steadily almost everywhere in the world for the last 20 years (race to the bottom).
The extra profit that the corporations keep because of this is then invested in instruments that allow these profits to grow and Grow i.e. Bonds.
So governments around the world are basically giving away the peoples sovereignty to these corporations by allowing them have so much profits and the power that comes with it.
In short governments are shooting themselves and their citizens in the foot.
The only way to reverse this would be to have a single rate for europe or agree to increase it by a certain amount everywhere.

The maddest thing about this is that the Private interests who own an d control all this money and power, have so much they don’t even seem that bothered about spending it. We only need to look at the amount held in the IFSC to realise this.
The second point is, if only they were paying 12.5% See articles on “The Double Irish” or the rate that Ryanair pays in corpo tax after the various tax avoidance measures they employ. We need to impose a minimum % just like they did with high net worth individuals.

In short we need a GATT for Corporation Tax

“I don’t understand why collateral will be required for the loan? Does it have to be collateralised?”
Well, two reasons:
1. To make it cheaper (maybe 1% according to @Eoin).
2. To make it palatable to our european lenders
3. When it proves unpayable, it isn’t going to cascade…

Readers might note that ‘two’ has turned into ‘3’. On my browser there is a numerical export-led recovery under way…

Apart from some non-attributed mutterings (and Austria) has any core EU leader (France, Germany, etc.) actually said it is a pre-condition?

I think this is a smokescreen put up by FF to make it look like they negotiated saving it when the reality is likely that it wasn’t even discussed.

If we have to raise our corporation profits tax, we can insist that they abandon all their own tax schemes, that make billions of euros profit for their banks, accounting companies and lawyers, at the expense of taxpayers in their own countries and many other countries across the globe.
In the mid-nineties, i spent a couple of years at the marketing end of international structured finance deals, based in Brussels. For example, on behalf of a Belgian financier, we proposed to reduce the price CIE would be paying for new German-made rolling stock, saving them ten million or so, by running the transaction through a Belgian trader, connected to Shannon (where interest payments could be treated as tax free dividends in Luxumbourg), using finance raised in Luxemburg from the US where it it was artifically cheaper because of legislation introduced for the US rolling stock industry by Sen. Bob Dole. (I think the scheme was called the Dole-Pick deal, or similar…I forget now, exactly)
But, in those days, and probably still, the UK was the leading hidden tax haven in the world, and not only because of special arrangements that could be made via its protectorates in Bermuda, Jersey, Cayman, etc.
Ireland successfully joined this club of creative international structured financial services in the 80s/90s, much to the chagrin of the UK, and it has brought us tens of billions of receipts for the exchequer.
If, as the Germans argue, our benefit is the other country’s loss of tax revenue (- in fact their loss is even greater-), then, Yes, true…but don’t just change things in Ireland…New OECD tax agreements would be required, which are almost impossible to achieve.
But its not a long term sustainable industry…Other countries can change the game by changing their international tax treaties and changing some of their local legislation.
We still need a sustainable industrial policy in Ireland.

Der Kaiser speaks!


He is, of course, right, but i’d dare say its still one of our most important advantages.

Senior European politicians are not fools. They remember the various treaty ‘reruns’. The total absence of humility during the ‘Tiger’ years. The hubris driving overseas property acquisition. Think back to the German ambassador’s precis of Tiger Ireland. Lichtenstein on the Liffey, etc.

The Irish were too good for Europe, with its motley collection of traditions and languages, and the US is paradise.

Ironically, now Ireland is going back to the future and has dusted off the alms bowl again. Europe is marvelous, a much needed refuge from the financial hurricane.

The bubble years provided an opportunity to reform corporation tax and a range of other reliefs but as usual short-term thinking and ignorance took over. If the price of a bailout is a reform of CT policy, the government has only itself to blame.

The EU/IMF forced us to access emergency finance with multiple public utterances from Merkel to the ECB. That does not mean we should seek to negotiate through the airwaves about corporation tax unless we are relly getgin squeezed in public. Making this a public issue makes it a political difficulty in other countries. At the core of the problem is the sense that this bailout with no creditor participation is all wrong.

Nov. 19 (Bloomberg) — Germany’s government is not putting any pressure on Ireland to change its tax rates or to ask for a bailout from the euro-are rescue fund, German government spokesman Steffen Seibert said.
“I want to emphasise that Germany is not putting any pressure on Ireland in any way, whether on corporate tax or on the rescue fund,” Seibert told reporters at a regular government press briefing in Berlin today. “The German government is very supportive of the Irish government and has every confidence in its budget plans.”

Assuming that the govt isnt actually discussing changing it with our soon-to-be IMF overlords, shouldn’t discretion be the order of the day from FG/Labour?



Looks like its all about claiming the glory for retaining the 12.5% even though it was never on the table. Cant believe these morons are still playing politics at this stage of the game. They really do take us all for fools.

re creditor participation

If the will is there this is an ideal opportunity to bring the bond holders into the mix for all the Irish banks.

“Any bank that applies for or receives more than x billions of ECB funding, not repaid within 3 months must enforce Clause y of the agreement. Clause y, stipulates that bond holders must accept discounts of 50 % of value of ECB funding. The alternative is for the bank to apply to be put into administration by the ECB. The maximum bond payout in that event of administraton will be 20%.”
Or some such…


Hard to know!

Off hand, do you know if there are any collective action clauses in any senior bank bonds (if any remain) similar to those contained in the Anglo subordinated bonds which are being used to burn some subbies?


“..the bond holders into the mix for all the Irish banks..”

Is there many left??

If there are collective action clauses in the senior debt then they may vote to accept a write down for some cash form the IMF scheme if the IMF insist on it. They would not accept any write down because there was a state guarantee but that guarantee is now only as strong as the IMF say it is!

@Eoin Bond

“shouldn’t discretion be the order of the day from FG/Labour”

On the other hand why don’t we make an almight stink about protecting the 12.5% rate so that it gets on the global media, maybe even a few protests with placards pasted with “12.5%”, maybe we can brand the “12.5%” as the last redoubt.

So MNCs might choose to locate in Vanuatu or Panama or UAE for tax reasons but they’ll know that in Ireland they will have a CT rate that *will not be changed* together with a more or less reputable/stable nation in the EU.

Given that any decision on the CT rate should be imminent and that it is “an absolute red line” and noting that the IMF have *lowered* CT rates in other countries, then why not bang the bin lids to advertise to the world that our CT rate is 12.5% and we’ll defend it to the last.

From RTE “Eurozone neighbours are pressing to raise the tax rate as part of negotiations for a rescue package”

Isn’t it gas that four months ago the UK was going hell for leather to reduce the CT rate in the North (which they can’t under the EU’s Azores principle). And yet they now want us to abandon our 12.5% rate. And why does the UK want us to abandon our CT rate? For our own economic security? Of course not, it’s down to the number of UK firms that have relocated here but talk about kicking someone when they’re down.

BTW that’s the same UK that is owed US$42bn by Irish banks (linky below). And which now wants that US$42bn transferred to Irish citizenry by getting us to convert ECB lending to an IMF/EFSF bailout. Again I can understand the country trying to protect its own interests but this really isn’t cricket.

To focus on the revenue is extremely misleading. Suppose a country set a corporate tax rate of 0%. All corporations book their profits in that country. Result, no corporate tax revenue anywhere, and every country has the same revenue. Clearly, one cannot conclude that the tax rate is sensible or fair.

Really, it ‘s obvious why the Irish want their corporate tax rate to stay low; they know they are getting free money thereby. Lure companies from other countries to book their profit through Irish subsidiaries, and enjoy the money which otherwise would go elsewhere. It’s the goose that lays a golden egg. Any neutral observor understands that this kind of taxation regime is anti-social and beggar-thy-neighbour. This doesn’t seem to faze some, including some of those who think European solidarity is supposed to consist of the Irish getting lots of money from the rest of Europe to bail out them, their banks, and their government. Solidarity runs both ways. It is a two-way street. It means, in the other direction, not allowing corporations from other jurisdictions to book revenue and profit through Irish subsidiaries, all to take advantage of a low corporate tax, which takes tax revenue away from other countries, which (irony of irony) is now needed to help pay for the bail-out of the Irish.

Nobody seems to have thought about discussing cutting it.

What’s to stop us turning around and reducing it to, say, 10%? Or even 7.5%?

Would it help? If we had a 5% CT rate, would new employers flock here?

Here’s another theory. Everyone likes a good synthesis, right? Maybe the 12.5% rate is under pressure, but FF is talking it up anyway because they feel there’s a decent chance of winning on that issue and, win or lose, they’d much rather keep everyone chattering and arguing about corporate tax policy than the (apparent) fact that our government is about to put more tens of billions of euro in bank debts on the backs of the old, the sick and the handicapped.

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