Citoyen Sarkozy et ses amis irlandais

Ireland’s problem is that we lay down for Sarkozy et al too quickly. We could have a learn a few lessons from CB.

Did he make the speech while in India? Or was that just a photo?
Because here’s a simple circle.
India buys some French military hardware or some such. But give out that they would like to be able to compete better with Ireland for jobs. Would he ever do something about their tax rate.
Once again all supposition based on the premise that Mr Sarkozy is corruptible!
Democratic deficit again – let the French elect Sarkozy to run France, but let European citizens elect the politicians to run Europe.

India buys some French military hardware or some such. But give out that they would like to be able to compete better with Ireland for jobs. Would he ever do something about their tax rate.
Once again all supposition based on the premise that Mr Sarkozy is corruptible!

Next, you’ll be saying that he’s a NuLab or Tory politician (or even Prince Andrew).

c.f. Saudi arms deals

Come on.. this is hardly worth discussing. Sarkozy is saying what suits him, but I doubt he actually believes the things Colm Mc says he believes.

It’s just a career politician speaking out of the side of his face. What’s new?

In the post yesterday “Cowen and Advice Relating to the Guarantee” http://www.irisheconomy.ie/index.php/2011/01/17/cowen-and-advice-relating-to-the-guarantee/#comment-118453
I argued, ‘Unfortunately the discussion above has turned from fact finding over the actions of the Irish government, to “blame the foreigners”. That [some] would want Ireland’s woes to be portrayed as the fault of the foreigners is understandable. However I’d hope to see a little fact finding first. That should be easy for those of us that have a professional training, work in the business, with access to information sources like Bloomberg’. As for the holders of bonds, we have very imperfect information, as probably does the issuers and the authorities too. But Bloomberg and Reuters have tools that allow you trace some of the institutions. On the basis of that information, I’d suggest that French and German holders of the likes of Anglo are quite in a minority.
.
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“One of the assumptions of EU membership … is under attack”. Quite right Colm. And those first and foremost are the stipulations of the Stability and Growth Pact. Now let’s remember that Ireland is planning again to run a deficit to GDP ratio in the double digits in 2011. So no real improvement (ex banks) over 2010, and no improvement over 2009. Europe and the IMF kindly agreed to the 2011 budget on the basis of proposals from the incumbent Irish government. It is not because the plan was agreed to that Ireland’s partners are in any happy about it.
Take out all the costs of Irish banks crisis from the budget. The ratio of total government revenues to the budget deficit would still be extraordinarily large relative to any Western or even emerging economy. Unparalleled indeed, in cash terms per capita. This state, now for several years in a row, was not imposed from abroad.
And of course, Colm’s article is quite right. To correct that deficit, either taxes go up or spending goes down (or growth surprises). I think the EU and the IMF have made it patently clear that they don’t mind which path is chosen, as long as progress starts, finally. If still not happy, then think about fully reclaiming national autonomy in tax policy by giving up the euro and its constraints.
As an aside, I was speaking today with some, let’s call them, non-Irish people, who were asking me about the levels of wages, pensions, taxes and benefits in Ireland. “Let’s all emigrate to Ireland” was their unanimous response. I didn’t tell them about the weather of course. Nor the price of drink (although the incumbent government did find the wherewithal to reduce excises recently). Nor the absence of some key infrastructure, despite the large deficits these past few years.
Now soon we will be entering the fifth year of the current crisis (Colm sees third). That’s taking the Bear Stearns troubles in June 2007 as the start date (so we are nearing the end of the fourth year). It might seem like three years in Ireland. But hey, the incumbent government’s policy responses are now water under the bridge.
“From an Irish standpoint, the sooner matters come to a head the better.” Agreed. But the ball is in the Irish court. If the incumbent Irish government were ever to stay its term, expect no change. I fear there will not even be a substantial change in policies should a fresh Irish government take the reins of power.
The strategy from the European authorities has been quite clear and consistent. In the post yesterday that I referred to, “Cowen and Advice Relating to the Guarantee”, I showed that the ECB, like the EC and most other governments, were pleading for a coordinated policy in relation to banks back in Sep/Oct 2008. Ireland went its own way, and stunned the rest of Europe. [Again, those non-Irish people today that I was speaking too today, asked the question that I invariably get asked, why, why, why did the Irish government choose to go the route it went over the past years, what could have been its motivations. This question comes back all the time].
And today, the strategy from the European authorities is also patently clear. They want a coordinated and planned approach to the problems that Europe’s sovereigns are facing. I find that the authorities are on the whole quite lucid. Remember we are talking here about tens of thousands of people, public servants, many with a sound economics training, scattered around the capitals of Europe – they have seen the numbers for Ireland and can read them like the palms of a hand. The politicians and senior EC-EU officials have spoken at length about the reforms to be introduced by 2013, and what is needed between now and then to facilitate that process. The present Irish government has taken another step down that road today following the outcome of the Ecofin-Eurogroup meetings. If there was dissent by Ireland, surprise me. If you are not happy, you may have an opportunity to express that in the ballot box.
Now you or I may not like the present European approach (I’d proceed differently myself if I were Mr Europe). But it is reality. And as Colm says, ““From an Irish standpoint, the sooner matters come to a head” etc. But again, the ball is in the Irish court, with the rest of Europe set on a game plan.
The same can be said for the socialisation of Irish private debt by the public purse, which the article also decries. The numbers are impressive. As I said in the post “Bini-Smaghi: ‘Ireland’s meltdown is the outcome of the policies of its elected politicians’, I’m quite surprised that there doesn’t seem to be much awareness or debate – here or in the press – about this topic. I was also surprised to see too no reference or debate in relation to e.g. “Central Bank steps up its cash support to Irish banks financed by institution printing own money” from the Independent last Saturday. Very clearly, the ECB wants disengagement. This ongoing trend is capital. But then, that doesn’t suit the line, “it is the foreigners’ responsibility”.
Yes, high interest rates in the Greek and Irish bailouts are justified, in terms of avoiding ‘moral hazard’. The solution is quite simple, as Mr Bini-Smaghi made clear over the weekend – cut borrowing, now. I wouldn’t portray these loans as a scheme to enrich the rest of Europe at Ireland’s expense. Europe’s governments would be far happier if they didn’t have to make these loans, so great is the risk, as they see it. The IMF – read the conclusions to its December assessment of the Irish aid programme – would be happier not having to help out Ireland.
And we’ll see if the Irish in the next election vote for more hysterity, or for the start of austerity, at long last. Bets anyone?

The proposition is that Ireland has unfair gains from competition on corporation tax. Now this claim may have had some weight in 2007, but in reality the good numbers in 2007 were based on borrowed money, not tax competition. In 2011 Ireland has a high deficit, high unemployment and high emigration. This “unfair” competition hasn’t been very successful, this is no macro evidence that Ireland has taken a perceptible amount of tax or jobs from larger economies.

I think that Irish people are, by and large, all too aware of the mistakes made. The broader Euro community don’t seem to accept that mistakes were made in the structuring of the Euro as well which greatly magnified the effects of errors in Ireland.

@Ciaran O’Hagan,

You have consistently advanced the most sense on this issue on this board. Thank you. Colm McCarthy, in characteristically forthright terms, has set out what a credible Irish government – with a solid popular mandate – should be saying, in public and in private, to our EU partners. Perhaps it’s being said in private, but there is little, if any, evidence.

It is right and proper to advance this case, but one needs to be aware of the political and institutional imperatives governing the behaviour of those we seek to persuade. In addition, there seems to be little perception in Ireland of the extent to which political, institutional and popular sentiment in mainland Europe has swung against Ireland. Wrapping the Green Flag around ourselves and acting as if we are innocent victims in all this won’t cut any ice. But it suits those insiders who are part of the problem and who will fight tooth and nail to protect their ill-gotten gains – and it has electoral attractions. While there is the vague possibility of cutting a deal or pulling a stroke all effort will be focused on this – rather than getting on with the reforms that are necessary to lift Ireland’s economic performance and to tackle the real crisis – unemployment.

It was ever thus.

http://www.bloomberg.com/news/2011-01-19/weber-emerges-as-ecb-man-to-beat-in-trichet-succession-as-eu-parcels-jobs.html

this link provides a very good insight into how Europe conducts it’s business.
National interests are more important than EU interests. There seems to be no equivalence with the US system of selection and ratification.
There is no mechanism to hold these guys to account.

Surely the Irish citizens are not the only ones who see that Europe is in real need of reform. They actually make Fianna Fail look good.

I am not in the least surprised that both German and French politicians are making statements on Ireland and the issue of taxation. It is not difficult to appreciate where they are coming from.

My understanding is that with one percent or so of the EU economy, Ireland was attracting around 20% of American FDI. (Prior to the deep recession and global financial crisis). If Ireland was attracting such a large portion of FDI destined for the EU, is it any wonder that the big players were getting upset. In Ireland we claim there are many reasons why we are attractive to FDI, but in France and Germany they see only one: corporate taxation.

It isn’t simply that we set our rate so low, but that firms can route their profits through Ireland, sucking taxes out of areas where they have even larger operations.

If this picture is true, why are we so surprised that France and Germany would like to see a change?

It is true that the EU Commission failed to spot how horribly unbalanced Ireland’s economy and fiscal model were over the last decade of the boom. Indeed, from some of their reports as late as 2007 it seems they didn’t probe very deeply. But none of this absolves us from being primarily responsible for creating our own terrible mess and the consequent contribution to Euro Zone instability.

Far better we stop seeing ourselves as victims of the EU and EU banks and start taking responsibility for our own mess. Only when we start to get our act together can we robustly defend our position on corporate taxes and FDI.

1) Yet again I ask: where is the mention of tax incidence?
Corporations do not pay taxes: whatever amounts they hand over to governments come from employees (lower wages), shareholders (lower dividends) and customers (higher prices). The mix varies. In open economies like Ireland most if not all comes from employees. (In the US it’s around 2/3).

Have a look at Wiki:

http://en.wikipedia.org/wiki/Flypaper_theory_(economics)

“The flypaper theory of tax incidence is a pejorative term used by economists to describe the assumption that the burden of a tax, like a fly with flypaper, sticks wherever it first lands.”

It is sad to see this combination of ignorance and illogic so typical of politicians not being picked apart on such an expert site.
2) It is illogical to say that the Irish corporation tax rate means that Ireland receives tax revenues that in some sense belong to other countries and then say that Ireland must increase its government’s tax take. For the first part implies that corporation tax revenue will fall if the rate is raised while the second says that there must be higher tax revenue.

*GERMANY WANTS GREECE TO BUY BACK BONDS WITH EFSF HELP: DIE ZEIT
*GERMAN GOVERNMENT PLANS GREEK DEBT RESTRUCTURING, ZEIT SAYS
*GERMANY WANTS NEW PLEDGES FROM GREECE ON BUDGET, ZEIT SAYS

@Richard Fedigan

Indeed, while agreeing with pretty much all Colm says, Paul Hunt has accurately described the real on the ground situation here when he says that political, institutional and popular opinion here has swung against Ireland regardless of the disingenuous motivations ( of Sarkozy and others) behind it.

JTO again:

Talking of ‘popular opinion’ in this instance is wild exaggeration. ‘Popular opinion’ in Europe doesn’t give a toss what tax rates are in Ireland. I travel to Europe lots on business. Still to find anyone come up to me and admonish me for Ireland’s Copporation tax rate.

Merkel and Sarkozy are bluffing. They are paper tigers. They have no power to enforce harmonisation of tax rates across the EU. Their own peoples don’t want any more political/economic integration across the EU. Look at the results of the Lisbon Treaty referenda in the Netherlands and France. Any attempt by Merkel and Sarkosy to force further political/economic integration across the EU will result in their own political demise and risk unravelling the whole EU project.

@ seafóid

So what sort of a death spiral would the Irish economy enter with 40% cuts to everything ?

This is a type of question that would be posed by a defender of the status quo?

The country over time has to be run competitively and within its means.
Pay/fees for TDs, GPs, lawyers should be benchmarked with well-run economies in Europe?

In 2009, Irish GPs were being paid almost five times more to administer the seasonal flu vaccine to patients than their counterparts in the UK.
The high-cost legal system which has been impervious to reform, is mainly supported by public funds and the litany could go on and on.

Bord Snip exposed the costly add-ons to the public pension system etc.
It’s the invisible unemployed will pay for all the featherbedding, absent reform.

@ Paul Power

It is illogical to say that the Irish corporation tax rate means
that Ireland receives tax revenues that in some sense belong to other countries and then say that Ireland must increase its government’s tax take.

According to Bloomberg, Google’s Dublin subsidiary sells advertising globally and was credited by Google with 88% of its $12.5bn in non-U.S. sales in 2009.

Allocating the revenue to Ireland helps Google avoid income taxes in the U.S., where most of its technology was developed. The arrangement also reduces the company’s liabilities in relatively high-tax European countries where many of its customers are located.

The profits don’t stay with the Dublin subsidiary, which reported pretax income of less than 1 percent of sales in 2008, according to Irish records. That’s largely because it paid $5.4 billion in royalties to Google Ireland Holdings, which has its “effective centre of management” in Bermuda, according to company filings.

Bloomberg said revenues from the United Kingdom totaled $840m in the third quarter of 2010 – – representing 12% of revenues — but the US firm paid no corporate taxes in the UK even though it has 850 employed there.

Microsoft diverts patent and other income from sales in other European countries to a company that operates from a Dublin law firm.
It pays CT to Ireland on some of this foreign income.

@Eoin,

Any possibility of a read-across to Ireland? I agree with Colm McCarthy’s point about the EU’s ‘one-size-fits all’ approach. It’s generally driven by the legal and institutional restraints under which it operates. But Greece is a seriously dodgy sovereign with a few banks bolted on; Ireland is an excessively large, dodgy banking system with a generally viable sovereign bolted on. Portugal and Spain fall somewhere between the two – with Italy and Belgium occupying their own special positions on this spectrum.

Some imagination required, or no?

Sorry I should have said with the ECB (not EU)

@JTO

John, next time you travel “lots” to Paris, let me know (I hereby authorise the moderator to give you my email address) and I’ll introduce you to a group of twenty French business people (including my wife) who will talk to you, at length, and in great detail, about the Irish CT rate and how it is fiscal dumping, unfair competition, the lot!

Popular opinion in Europe USED not give a toss about the Irish CT rate, indeed never gave a thought to Ireland at all.

That has very definitely changed. German popular opinion is fed up to the back teeth “paying for Europe” as they see it and, indeed, would rather rely on their own booming economy ( the ONLY substantive economy in Europe capable of competing with the US and China.). Merkel is under pressure to pull back from “European” involvement including bailing out economies like Greece and Ireland that are perceived to have lived high on the hog of EU/German money.

Let me assure you that, here in France, a combination of 10% unemployment, 25% youth unemployment, falling “pouvoir d’achat”, increasing middle class “poverty”, extreme right wing threats to the right and Sarkozy’s abysmal poll rating has the average French citizen believing helped by Petit Nicolas, of course) that it’s all due to speculators and, yes, recently, fiscal or other dumping by Ireland and China!

A huge scapegoat here is “délocalisations”, very often by subsidiaries of MNCs who move their French operations to Eastern Europe or the Far East but who have been doing this for 20 years ….in Ireland!

I’m repeating myself but the CT argument itself, while crucial to Ireland, is something of a strategic sideshow.

My main point is that Ireland’s almost total dependence on exports from US MNCs ( in Ireland for only one reason) is unsustainable and the sector is NOT creating net increased employment. Now is that clear, John?

doesn’t france and germany have unfair advantage by controlling interest rates??

The blame game……I don’t think anyone is missing the point that FF amd their policies are to blame but that doesn’t mean we have to think everything is rosey in the garden with the EU…….if something is rotten point it out, isn’t that where we (well FF voters) went wrong in the first place by voting FF in for a third time without heeding the wanring signs that were there!!

@ Michael Hennigan

Thanks for that. Of course the country has to be run on a sustainable basis but how would you get to the point where the budget is balanced? how long would it take? And how would you tackle price gouging ?

Today’s Irish Times featured 2 lawyers who work in Dublin who spent €9.5 million of their own money renovating a stately home in Sligo

http://www.irishtimes.com/newspaper/features/2011/0119/1224287849227.html

How good are Dublin lawyers in reality? How do you prise the money from their grubby fingers ?

@De Roiste

Y’know it’s fun chatting with you guys but it takes quite a bit of time ( not used to this and forgive the views of non-economist former CEO ( global organisation) out of Ireland for 30 years but it comes down to this:

At this stage, it doesn’t matter what/who caused the mess, France is relevant only inasmuch as it influences Germany ( As Adenauer put it: “We have to salute the French flag three times before raising the German one”……. but we’re sick and tired of all that! sotto voce), We won’t have FF to blame any more and the problems will not be solved by the simple democratic expression of Irish voter’s ire.

It may be that Ireland can get some mileage out of Mel Brooks’ Blazing Saddles line “drop your guns or the ni**er gets it!” but we’re already seriously wounded, we’ll have to negotiate for our lives and we’re negotiating with partners, all beholden to Germany, which actually could survive on its own without “Europe”.

“Europe” doesn’t like this and will have to come up with a solution ( if Germany plays ball).

China is watching, the US is not really all that interested ( in “Europe”) and this is the arena Ireland Inc. has no choice but to play in.

Our young people have no choice other than to play in this arena and the proportion realistically able to stay “at home” or “come back home” some day depends on what we do next!

Bon Courage.

@Eureka

“Europe cannot manage crises. It took the Americans to sort out Kosovo.”

America can’t manage crises either. Look at Afghanistan. Or the state of the US economy and job creation. It’s the same problem on
both sides of the Atlantic. Broken economic models, corruption and inept leadership.

@De Roiste,

Indeed. I doubt that directing to FF/Greens Cromwell’s injunction to the Long Parliament (as Leo Amery did to Chamberlain in May 1940) will go down well on an Irish site, but it was never more apt: “You have sat here too long for any good that you may have being doing. Go, in the name of God, go.”

@ Seafoid
It’s not that they’re great it’s just that Europe seems paralyzed.
The question is why don’t we just negotiate with the IMF? They often entertain restructuring and don’t engage in damaging bull about Corporation Taxes.

@a
except the point of Colm Mc’s article is that the main thing that’s actually happening in the bailout is that the foolish creditors of the foolish or criminal Irish banks are being paid out with money that then increases the debt of the heads of the Irish taxpayer – who wasn’t involved in the deal in the first place. Colm’s point is that it’s not clear who is doing who the favour in this system.

The level of CT is a distraction in the discussion of the bailout.

Of course, the fact that the Irish govt is still borrowing 20 billion a year to fund excessive spending means that the Irish taxpayer doesn’t have much of a chance of getting a good deal in all this.

@ Richard.
I didn’t mean sideline as in leave. I meant sideline as in reject their begrudging usury in favour of a more competent organization.
The Asians will be funding our bailout ultimately but only after our amis have taken their cut and our corporation tax.
I don’t propose for one minute that we leave Europe or the Euro. In fact going to the IMF alone is much more consistent with the Lisbon Treaty than the current set-up.
And they can’t introduce tarifs on us for doing as the treaty instructed.

All,

There comes a point when people just stop listening. Think late Thatcher government, late Major, late Bush, late communism. People have been lectured about / engaged with arguments in favour of, things they were always skeptical about. Then they reach a point where they consider they were being had all along – and they shouldn’t have listened.

Ireland is at that well worn point right now with respect to FF and its current government.

From within Ireland, you might miss the point that the powerful parts of Europe are at that point now with respect to Ireland’s economic model. They don’t care what Colm writes to a domestic audience in Ireland. They remember Mary Harney being touted around on CNBC a few years ago as the woman who could at last sort out Europe’s failing economy.

You can lecture them all you want about how they are wrong about Corporation Tax. They have had enough of Irish lecturing and so long as the country continues with its choice to ask for credit to fund its structural deficit, they are likely to do no more than appear to listen politely whilst thinking about something else.

A bit of national solidarity and the ability for Irish politicians to turn up in Europe and point out that the only thing being borrowed for is to keep the banks going, and they might have to pay attention.That is on no agenda I’m aware of though.

@Hugh Sheehy,

I think it should be pretty clear by now “who’s doing the favour to whom”. The EU’s Grand Panjandrums are simply buying time until (a) their peripherally-exposed banks have built up capital to take a hit, (b) the core economies have regained some economic strength to deal with some bank losses (and failures) and (c) their voters have been persuaded/feel capable to backstop some bank losses/failures through increased taxation for bank recap or hits on their savings pots. On (c) it is proving necessary that the peripherals are taking pain – and are seen to be taking pain – as punishment for their previous misgovernance before any releif will be contemplated.

Yes, from an Irish perspective it may seem terribly unfar that Irish citizens are paying not only for their own misgovernance, but also for the poor economic and financial governance of the EZ. But that is the price of securing any measure of the democratic consent required in the core EZ countries to resolve the current crisis and to reform EZ governance. And it should be noted that Pres. Sarkozy is already campaigning for re-election in May 2012 and Chancellor Merkel is facing elections in 11 lander this year. Why should we expect other EU politicians to be as pure as the driven snow when our own put the interests of their factions before the public and national interest at all times?

Continued Irish ranting about how hard done by we are by the EU (accompanied by a failure to pursue necessary structural economic and political reforms) will simply harden the hearts of these voters towards us – and postpone any reform at the EU level and any relief that might be forthcoming.

@Andrew S
“Another bubbling wikileaks expose via a Cayman Swiss banker (mentioned by someone else here yesterday / can’t find name sorry) might bring it back into the news.”
I’m looking forward to some ‘Elmer FUDd’…
(Or it’s Irish version FU, Denial, Denial…)

@ hogan

Switzerland is to rush forward legislation to have a minimum 3 year jail sentence for anyone who forwards Swiss bank data to a third party outside of the country , in reaction to the Elmer development.

Wikileaks and recent advances in technology are potentially very damaging to the concept of Schweizer Bankgeheimnis.

@ Paul Hunt
“Trying to tax mobile MNCs is like trying to pick up quicksilver with a fork, as Lloyd George described negotiating with de Valera (who, characteristically, asked why he didn’t use a spoon).”

Well it certainly is at the moment but what if we had one rate for the whole of Europe as the French president suggests? Its not good enough to just say we are powerless to make business pay tax.

All that it would mean is that all business would pay a fair rate of tax on profits. These are profits that we are toldthey cant even touch and are left sitting in the IFSC.

It would definitely benefit Europe as a whole.
It would also mean that Ireland would be forced in to doing the right thing and stop being a tax haven. It would also force Ireland into adopting strategies that lead to trying to encourage domestic exports not just non EU based (which have stopped creating net jobs). This is a nettle that we should grasp.

Richard Fedigan is right.
When we were the poor men of Europe. Europe were good enough to help us and we were more than happy to take that help. Now when they ask us to stop allowing MNCs to avoid tax, that they could do with, we say sorry we cant help. But please keep our show on the road by loaning us money we cant afford to pay back.

It is not right that we are conducting this debate without the figures.
What is the Average rate of corpo tax paid by non EU headed MNC’s in Ireland.
We know it is somewhere between 12.5% and the 2.4% google pay.
What is the size of their contribution as a % of the 3.923 billion total?

“German GDP growth averaged 1% annually between 1990 and 2010″

You do know that Germany was reunited and East Germany integrated into the Western economy during that time, don’t you?”

Yeah, if only Ireland and other peripheral states could integrate somehow with such powerful and deep markets, share a currency and push through the tough times to form a more perfect and peaceful cultural union as a beacon of hope and justice to the world after centuries of strife. Europe could become great again, shame it’ll never happen.

wait! what?

@eamon moran

Well it certainly is at the moment but what if we had one rate for the whole of Europe as the French president suggests? Its not good enough to just say we are powerless to make business pay tax.

All that it would mean is that all business would pay a fair rate of tax on profits. These are profits that we are told they cant even touch and are left sitting in the IFSC.

JTO again:

Like most posters on this site, and like most Dublin 4 economists (which, obviously, I have no idea if you belong to), you are totally forgetting that the Republic of Ireland is only part of this island.

Consider the implications of what you propose:

(a) The chances of the U. Kingdom Government agreeing, especially a Conservative-led one, to a proposal to harmonise Corporation Tax acrose Europe are ZERO. Therefore, we can exclude totally the possibility of the U. Kingdom agreeing to such a proposal in any shape or form.

(b) There is allready a proposal to lower Corporation Tax in N. Ireland to 12.5%. The Nationalists are in favour. The Unionists are a bit lukewarm, but only because they are always cautious about cross-border ‘harmonisation’ within the island of Ireland. If the Republic of Ireland increases its Corporation Tax, the Loyalists will instantly be enthusiastically in favour of lowering Corporation Tax in N. Ireland to 12.5%, because then it would not be ‘harmonisation’, but N. Ireland gaining a major competitive advantage over the Republic of Ireland. What would then follow would make cross-border shopping in Newry in early 2009 seem like a picnic. There would be a mass exodus of MNCs from the 26-counties to the 6-counties.

Talk of the Irish tax rate siphoning off revenue from the rest of Europe is overdone. Even if our CT rate is one third of that elsewhere, we would be rich in revenue if we were taking a perceptible amount of revenue from economies 10 times our size. The reality is that schemes like the “double Irish” mean that revenue is siphoned out of Europe entirely via places like the Netherlands. I don’t see why Ireland should not defend its rate, while working on pan EU proposals to make these kind of stunts more difficult.

@Seafoid
You quote the FT article – I assume you agre with the sentiment:
“High bonus payments are a symptom of a problem, not its cause. ”

Towards the end of Michael Lewis book “The Big Short” (Thnks EB for the rec) he makes a strong case that the bonus payments were largely the cause of the problem. The giant wall st family owned (and partnership) investment banks were one by one turned into public corporations. The executives in these corporations then paid themselves enormous salaries and bonuses which were linked to so-called profits. Some collapsed (bear Stearns Lehman Bros) others should have (Goldman Sachs) but were bailed out. In many cases the huge bonuses were still paid.

We have seen similar but maybe smaller scale events here. The salary/bonus structure in financial – and other publc corporations is often a blatant looting.

As for the est of the thread – I diddn’t believ I would ever agree with the bulk of what JtO has to say but in this one I do. There is soething undignified in crawling to Sarkozy as some of your posters seem to recommend.

I agree with Colm:
“From an Irish perspective, what looks to him like financial assistance from Europe could as readily be characterised as a bailout of European investors foolish enough to lend to Anglo Irish Bank and other insolvent banks, courtesy of the Irish taxpayers. “

I don’t know if people have seenthis before but Barosso’s anger with Joe Higgins and with Ireland is palpable in the second half of this clip (after Joe Higgins has described how we should get away scot free):

http://www.youtube.com/watch?v=uah_BVTmHeM&feature=player_embedded

It is getting very serious when you see that kind of passion from Barroso.

@a
As I’ve said in numerous posts on this site, the “Irish” are far from blameless in all this. Here’s your classic narrative..

Dodgy Irish bankers borrowed money to lend to to dodgy Irish builders. The builders borrowed the money to build houses to sell to unwise (but unknowing, mostly) Irish people who also borrowed money from the same dodgy banks to buy the overpriced houses. The dodgy Irish govt picked up loads of tax from all the activity, encouraged a boom, overpaying the public service and generally raking it in and swanning around pretending to be gurus while studiously ignoring any regulatory problems in the banks.

Many people who seemed to be making money on this scheme bought houses in Bulgaria, cars in Germany and even oil wells in Nigeria. The Bulgarian houses aren’t worth much, the Mercs are old, and the oil wells in Nigeria are – well – oil wells in Nigeria.

Eventually the dodgy banks consisted of nothing but property loans and the careless lenders finally got nervous…which was sensible but years too late and despite widespread warnings. Now the whole thing collapsed. All the builders are broke. All the construction workers are unemployed. All the banks are bust, although the govt didn’t think so and guaranteed all their debts and promised to pay them all back.

Now we have Irish taxpayers, most of whom had nothing to do with the boom and many of whom are in negative equity being forced to pay back the banks’ creditors. The govt has done nothing even remotely adequate to reduce excessive spending, so Irish taxpayers will have to pay off the salaries and pensions of the protected few too. Meantime, the debt continues to pile up and the money is mostly gone…so…who pays?

Most of the “guilty” are broke or have good lawyers or both. Most of those that are left are also near broke. Many had nothing to do with the boom but still need to pay. The ones that made money are going to be hard to recover money from – at least without retroactive taxes of some sort.

Meantime, for the “Irish” to say “this is not our fault” seems ridiculous or near criminal from a Euro point of view. Many Irish feel similarly angry and defrauded. The debt continues to pile up and the money is mostly gone.

How about “this is not only our exclusive fault”. We’ll take pay cuts, welfare cuts, tax increases etc. You will not not charge us a premium interest rate nor preclude at least some sharing of the burden by those who made unwise investments.

@Zhou
Actually I thought Joe won that on hands down – Barroso again conflaed fiscal and financial systems problems – that will never wash with the public no matter how fast you say it in one sentence

@Eureka
We couldn’t have that – the IMF might have excluded the bank bondholders from the deal – just not on – they need their bonuses.

Seriously. Is Borroso your president? Did you elect him?
Either Europe can give us 3% for 5 years with restructuring and no attacks on tax rate or we go straight to the IMF.
That’s the negotiating position isn’t it!

@AMcGrath / Seafoid

Who one the debate is beside the point. Political relationsa re more akin to romance than debating. Being right is no use if you want to get the leg over!

feckin typos! – one -> won

I never used to mispell words. I certainly never spelt out completely different words. The herd-edge buffaloes are being picked off steadily.

@HS

🙂 very good.
Don’t tell Sarkozy (or Joe Higgins) that we’re still eating the fancy crackers!

@BeeCeeTee

Sorry,I have absolutely no influence on my government.
I am curious to know how you propose to finance the cash needs of your government: go on the market?
I am not aware that the IMF is willing or able to do more than he has done.
Usually the IMF is used to frighten children into submission except in Ireland
where he is the good fairy.Anything is relative.

50,000 due to emigrate this year!
Current approach not working. Europe stood by while thousands were killed in the Balkans. Europe is self satisfied, arrogant, complacent and superior.
Look how we are to be punished for our mistakes and look how to get off the hook for their own.

@ JTO

Where does the budget deficit fit in your model ?

Michael Hennigan:

How does showing that Ireland gets taxes on outside activities answer my point about the illogicality of complaints about this by people also wanting the Irish government to get more tax revenue?

@Dominique Jean-Raymond,

The opinions and perceptions of people like you from outside this little island of saints and scholars are very welcome. I would welcome even more. You may have noticed that Karl Whelan has just opened a thread dealing with the financing needs of the government which may help to address the question you have raised.

“@Messrs Barroso and Higgins

This is simply a dispute between two rival Marxists. Normal people should pay no attention.”

Joe Higgins has a knack of winding up his fellow socialists!

Here’s the plan:
Stay in the Euro
Stay in the Eurozone
Deal with the IMF for our rescue package

We don’t have time to dither. We are only realizing what many Europeans already know – European institutions are not fit for purpose. Don’t waste time. I’m sure the Bosnians thought they’d help them out too, Im sure the Rwandans thought that after arming the militia the French would take some stance on the genocide in its former colony. Europeans are incapable of tesponding to anything that does not directly affect their very narrow view of their national interest.

@Eureka:
“We don’t have time to dither.”

In that case, why do we permit the continued existence of the present excuse for a government?

bjg

@ JTO

The bond market isn’t buying your story. When will we see the famous NTMA roadshow ? Is it on after Wanderly Wagon ?

If Joe Higgins gets that message out in the election campaign he can’t lose.

Under current the European architecture, taxation is a national question (mainly …). But the current European architecture isn’t working. For instance, it allows small countries to run policies (light regulation of banking, low corporate tax rates) which are beneficial for themselves (or at least for the national oligarchy) but damaging at the European level. Stick to the rules and Ireland can’t rely on getting any bail out from European governments. The European governments in question (notably Berlin) understand that now is not the time to increase the Irish corporate tax rates – but when the facilities come up for renewal, the question will not be what Ireland is legally entitled to do with taxation, but the negotiation of a new arrangement.

Sarkozy is playing his usual game – he wants to be seen to leading the charge which he is actually following. Berlin will call the shots.

In five years time, there is likely to be a two-speed Europe, with Ireland in the slow lane. Accidents in the slow lane won’t be considered to be that serious for the countries in the fast lane. This is the thrust of Schäuble’s proposals and Irish corporate tax rates will be a small part of a larger negotiation.

@Gerard

Go to the top of the class, that man!

“The European governments in question ( notably Berlin) understand that now is not the time to increase the Irish corporation tax rates but when the facilities come up for renewal the question will not be what Ireland is legally entitled to do with taxation but the negotiation of a new arrangement…. Sarkozy playing his usual game … wants to be seen to be leading…..actually following…Berlin is calling the shots…..Irish corporate tax rates will be part of a larger negotiation.

So, no more to be said really.

Put Gerard ( are you a tough negotiator?) in charge of the team, advised by Edgar Morgenroth ( a German at ERSI if I’m not mistaken), stop talking about France ( monkey!) and lets’ get to work now on a new Irish “Industrial Strategy”.

I’m leaving you on this thread now that Gerard has taken charge and concentrating on changing our attitutes to the fact that emigration is now a FACT and not necessarily, always, “a bad thing”.

Michael Hennigan;

you’ve lost me completely.

Nothing you wrote disproves or refutes standard economic theory going back around a century that corporations do not pay tax.

Could I ask a question. Could one of the many fine economists here tell me what effect say a 2.5% cut in our corporate tax rate would have a) initially in our tax take, b) the medium term effects on our tax take say 5 years hense? What might the employment creation effects be? Could any of the politicos here calculate the potential effects such a move would have o Sarcozys blood pressure and is there a corrolation? No, seriously if 12.5% is good then surely is 10% not better?