“Sacred and Inviolable” Tax System – Ireland Fears Loss of Economy and Finance

"Sacred and Inviolable" Tax System - Ireland Fears Loss of Economy and Finance

After Intel’s entry into the city in 1989, the financial boom of 16,000 residents in the western part of Dublin’s Liclips went hand in hand with Ireland’s low tax strategy.

Since then, the American semiconductor company has invested $ 15 billion and created more than 5,000 direct jobs for chip manufacturing and the development of artificial intelligence. She donated equipment to local schools and collected checkbooks for community groups and charities in nearby villages.

“If you throw a rock, it’s going to affect people who worked at Intel or people who work at Intel now,” said Bernard Caldwell, a local congressman. “Because of Intel’s investment, we are the enemy of many cities.”

The awards for cities like Leakslip help explain Ireland’s continued support for the idea of ​​low corporate taxes and why the country supports eight countries, including Barbados, against the US, China, India and most EU countries. .

As part of the negotiations with the OECD, the changes approved last week include a minimum rate of 15% and a mechanism by which countries can tax large corporations based on their sources of income. Irish Finance Minister Paschal Donohue has warned that Ireland will lose $ 2 billion in tax revenue every year. Other European followers are Hungary and Estonia.

Ireland, once considered the poorest in Western Europe, has suffered for decades with high unemployment and immigration. It first achieved a long-term economic success during the heyday of the Celtic Tigers in the mid-1990s. In 2009, Dell decided to move their European manufacturing facility to Poland, remembering that success would soon collapse. This story shows that people are not ready to give up a project that provides a steady income.

Likeslip Intel’s new microchip manufacturing facility is under construction © Barrow Cockley

“Since the late 1950s, most Irish people recognize that Ireland has developed a well thought out and successful strategy to maintain a low, unaccounted for and sustainable corporate tax system and to attract large amounts of foreign investment,” said John Goodlotten. He served as Prime Minister from 1994 to 1997.

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Researchers at the Institute of Economics and Social Studies estimated in a 2011 paper that the lowest corporate tax rate in Ireland is currently 12.5%, with productivity rising by 4 percentage points and an increase of 6 6 billion between 1994 and 2005. OECD data show that the country accounts for less than 3% of the EU’s economic activity, but from 1990 to 2020 it attracted more than 8% of the EU’s total foreign direct investment.

Frank Barry, an economist at the University of Dublin, said he was “deeply concerned” about the consequences of the world’s lowest tax rate: “We can talk a lot about our educated workforce, the English language and joining the union.” European (as a Power Foreign Direct Investment Attraction) … but they are all built on the cornerstone of the corporate tax system. “

“If you knock on the door, no one will tell you, I think we should raise the corporate tax rate,” said Joe Neville, a member of the Leaklip of Fine Gail, the second largest party in the Irish ruling coalition. “If you have a job … we think it offers jobs and opportunities, you can understand the reluctance of people to change it.”

Comments are beginning to change to some extent. Richard Boyd Barrett, legislator of the “Profit First” party, which has five of Ireland’s 160 seats, said the story of multinationals using loopholes to pay “very low” taxes challenges Ireland’s “sacred and inviolable” system.

One of the stories is the Google feature, Tax exemption Due to the “double Irish” loopholes (phased out between 2015 and 2020), his Irish holdings made a profit of $ 13 billion in 2019.

Leakslip MP Joe Neville: “If you knock on the door no one will say, I think we should increase the corporate tax rate.” © Polo Nunes Dos Santos / FT

“Some people think big corporations pay terribly low taxes,” Boyd Barrett said. “But there is a situation where this fear persists … If interest rates change, multinational companies can go out.”

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Carl Rogers, an investment professional who worked in North America before returning to Dublin, said the low interest rate would “definitely benefit Irish companies”. Now, he wants to know: “With such a low corporate tax and a high personal tax, is the damage to the property of ordinary Irish citizens greater than the gains?” The highest nominal tax rate in Ireland is 40%, with revenues exceeding $ 39,300. In addition, income exceeds 49,357 euros to cover 8% of public social expenses.

Intel’s Leakslip Factory. The company’s large campus is developing artificial intelligence © Intel

Raymond Hegarti (Raymond Hegarti) once ran five multinational startups in Ireland, remembering working for a Japanese company that did not list taxes as one of the top five selection criteria, but focused on the skills and ways to make foreign direct investment. The language is also basic: “Our Japanese president … does not learn a third language in a country that does not speak English”.

When Ireland was chosen as their EMEA hub in 2015, corporate tax was an attractive place but not considered, said Connor Heaney, managing director of logistics company CMX Global. They appreciated Ireland’s location and network of multinational companies, and found it to be ‘the easiest place to do business in the 60 markets in which they operate’. “If the corporate tax rate in Ireland changes anywhere, it will not start there. We love Ireland. “

In the leak slip, people are cautious when considering giving in to international pressure. Caldwell said the 15% increase would not be a major setback because “Intel is a company large enough not to leave Ireland”. “He is not afraid to raise the Irish tax rate to 15% if necessary,” Neville said.

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“When I was a kid, Intel came here, why this is Leekslip, why Ireland,” he said. “Ireland is now the main center.”

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