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Ireland begins a more social democratic transition

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Irish Prime Minister Michael Martin on October 5, 2021 in Cronje (Slovenia).

But what is happening in Ireland? On Thursday, October 7, the Organization for Economic Co-operation and Development (OECD) agreed to reduce the country’s sacred corporate tax from 12.5% ​​to 15% in line with the global minimum tax set on Friday. ). Three days ago, the government unveiled a major infrastructure investment plan worth 16 165 billion after more than a decade of economic prudence. Two pillars of the national economic model – low taxes and low costs “The country is moving towards a less socio-democratic paradigm than ever before”, Says Kieran McQueen, an economist at the Dublin-based Institute for Economic and Social Research (ESRI).

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The tax change is the most symbolic. The corporate tax rate of 12.5%, especially the many extras that make it possible to pay significantly less, is the hallmark of green erysipelas. Even when she needed a backup plan from the International Monetary Fund and the European Union (EU) in 2010, she refused to change it after her banks collapsed. The strategy was to attract as many multinational companies as possible from around the world, especially from the United States.

It worked very well. After the crisis of 2010, the recovery came from the exports of multinational companies. Despite the Covid-19 pandemic, Ireland is the only state in the European Union that has not experienced a recession: exports of pharmaceuticals and new technologies, two of its major sectors, have made up for the recession. By 2020, gross domestic product (GDP) growth was 5.9% and is expected to exceed 12% by 2021 (multinational corporations are very dominant in Ireland, GDP is a measure that distorts the local economic reality; ESRI calculates an alternative data that provides – 4.2% by 2020 At + 7.1%, which remains very strong).

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“More investment and more education”

Amid negotiations on a minimum world tax treaty, Ireland has been pulling by the ears. Reluctantly, the government gave investors a clear signal: it would not go beyond the 15% rate. “The United States, which is the majority of our multinationals, is part of the agreement, so we were able to accept it.” Gerard Brady, an economist at IBEC, explains the employers.

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