The question surely is this! If these foreign companies are making so much money, then why aren’t more of them queuing up to come here ? And the bigger question is, why can’t we produce our own homegrown companies in such a favourable tax regime?

And don’t forget the countless irish companies who supply goods and services directly to the mnc’s. They are supporting these companies, keeping their employees in Ireland and benefitting the economy at the same time.

We don’t need to increase the tax rate to generate more revenue. Just get the MNC to pay the existing rates. Cut the allowances and reliefs which allow them to get away with paying tax as low as 1 or 2%.

Im afraid I would be suspicious of the biased of these figures. Low corporate tax is a good incentive for fdi in this country. If we did not offer it why would companies come here. We have nothing special here that the rest of the EU does not have. We are the western most country in the EU making transport costs higher & getting products to market slower.

A couple of points here:

1. In the major European economies, despite what they say about Ireland, companies pay a much lower effective corporation tax rate than the headline rate as advertised

2. The figures Taft presents are misleading. The tax per employee figure is not the result of our corporation tax, it’s to do with the amount of revenue that’s directed through Ireland by these companies, where the amount of productive work, completed in Ireland in achieving that revenue, is questionable.

Raising Corporation Tax will affect jobs in MNCs where productive work is carried out here.

What ideally would be tackled is the re-routing of taxes through Ireland by those HQing in Ireland simply to funnel profits, via an opaque myriad of holdings, through our favourable tax system. This “double Irish arrangement” is what inflates Mr Taft’s figures of profit per employed person, and also explain why every MNC doesn’t just simply move to Ireland because of our young/educated/amazeballs/other guff workforce and low corporation tax. Unfortunately, many of the MNCs doing this are also genuinely keeping jobs here, so we can’t afford to stick it to them.

Ultimately, we use these companies to keep jobs in our economy, where we otherwise wouldn’t have them, and the other side of the deal is letting them enjoy light tax regulation here for profits that aren’t generated in Ireland anyway. That’s why we annoy our European neighbours so much – it has little to do with corporation tax headline rates and everything to do with us allowing profits on services sold into France and Germany be funnelled through Ireland. The real goal of EU-lead initiatives on ‘tax harmonization’ is to have taxes collected at the point of sale, not in the country through which service revenue is routed.

As for upping the headline rate? It’ll not generate much.
How much corporation tax does the state actually collect? Under 3 billion a year.
A couple of percent on the headline rate will add feck all to the exchequer, and will create uncertainty in the business environment.
Tackling the double-irish arrangement will only serve to force those profits to be declared in France or Germany or wherever, so we’ll have net less corporate tax.
Anyway you look at this, tackling it is a lose/lose

All in all, despite what I say above, I don’t believe MNCs pay their way here, but practically speaking, we’ve had enough bluffs called (bank guarantee etc) without getting into a game of chicken with major employers.

The MNCs might only employ 150,000 odd people here (source: 148,000 quoted IDA-related jobs here: http://businessetc.thejournal.ie/over-13000-multinational-jobs-created-in-ireland-last-year-320498-Jan2012/), but that’s a lot of jobs to be playing with, and many of those jobs are well paid and providing a lot of tax to the exchequer.

Michael, no doubt you aware of the significant employment generated by MNCs.

They are the only bright light in the economy in recent years and without them our unemployment levels would be 600,000- 700, 000.

I suspect your argument is coloured due to the fact that few MNC are unionised, a sore point for your UNITE organisation.

There’s a higher profit per employee in Ireland, because we don’t have multinationals manufacturing here in any labour intensive process. Most multinationals base their revenue and human capital based departments here which is less labour intensive per person creating a higher amount of profits per worker. The unite spokesman unfortunately compared figures between countries without correlation which in turn renders his argument statistically invalid…….

If the tax rate is really too low, then why are foreign multinationals packing up and leaving?

250,000 people are employed as a result for FDI in Ireland. Its no secret as to why those companies established a premise in Ireland.

I’d be interested to see stats on what penetration of the FDI arena Unite or any other unions for that matter, have made in recruiting members. I expect its an extremely low percentage. Does that make it easier to cry out for a corp tax increase? And if that’s the case it’s very difficult not to read to consider the article bias in favour of the union.

Then again if union penetration is high, is this cry out not turning your back on your members?

Brilliant idea. Let’s raise the tax rate so we lose loads of multinational jobs. I mean – we don’t really need jobs at the moment – do we? And when all the high tech, high wage jobs have gone, and we’re all just cutting turf and selling butter and milk to each other, won’t it feel great that things are much fairer and none of those nasty MNC’s are getting away with low taxes. At least not here…

Michael, I’d be interested to see some recent figures to illustrate the “massive profits” being made in the IFSC to see how they compare to the other MNCs.

“Ireland is not just a league-leader, it is off the chart.”

And so is (relative to our size) US investment in Ireland.

“US Investment is crucial to Ireland’s economic success. Collectively US companies have a
US$165bn foreign direct investment (FDI) in Ireland. This represents 8% of all US investment
in the EU and 4.6% worldwide. This equates to more than the total invested in the BRIC
economies (Brazil, Russia, India and China). The US accounted for 74% of Ireland’s inward
investment in 2010.”

“Cut homecare help, bash low-paid workers (public and private), slash social protection, close down services, tax average income earners even more.”

Are those the only other options? How about capping all state and semi-state remuneration? A couple of days ago someone, rather irrelevantly on a thread about gay marriage, asked for a referendum on such a topic as this. Of course, that would be insane. State and semi-state remuneration is not a constitional issue. However if there is to be another referendum why not give everyone a slip of paper and ask a question, wide scale crowd sourcing of the electorate that would be non binding. A possible question might be of the form:

Do you believe there should be a cap on remuneration for all state and semi-state employees?

The answers to be:

Yes, and it should be capped to ___ times the Average Industrial Wage.
No.

From the opinions so received a sensible cap could be established.

[The AIW is around 40K, I'd suggest a cap at a factor of 3]

An article from somone in the unions. Are these the same unions that have a death like grip on our economy by virtue of the civil service pay structure especially when it comes to middle and higher management.

Low taxes are not the only reason the MNCs are here THOUGH it is a leading element. Keys not forget we are smarter than the average EU bear in terms of work force (sometimes questionable) but either way ireland provides a smart workforce, great lifestyle and Europe at our front door.
There are many other reasons why we are a good choice. I think a small raise in corp tax for multinationals ONLY would work, but a general corp tax raise would be killer on indigenous companies and the SME sector.

My job depends on one of these MNC’s so I think you can stick your charts… Take for example Pfizer in Cork. They’ve recently laid off and more are planned, even with the low corp tax rate. If the tax rate is raised I’d guess that the rest of the employees would be saying goodbye to their jobs.

Michael – as the corporate tax rate was reduced the overall tax take increased. To increase the rate would eventually and permanently reduce the corporate tax rate, directly reduce the income tax take (lost employment) and increase social welfare costs as well as indirectly impacting the general take (multiplier effect).
You seem quite intelligent so I can only assume that you would benefit from having more vocal out of work members than content gainfully employed members? Personal self preservation trumping the greater good?

Reduce it to ZERO as it would create jobs.

lower the corp. tax rate and create employment!

You could argue thats its unethical that these MNC’s pay little to no tax whilst individuals are being burdened with rates approaching 60%. I guess that’s capitalism and also the strategy that this country has chosen. The headline rate should stay the same but perhaps close off some of the tax loopholes.

Michael you can expect to squeeze the profits generated from these multinationals more than we are, you are a little short sighted here. They are here for nothing but the tax system. They make allot in return for relatively little tax but this modest tax is our gain along with the jobs they create..now f we raise the tax we face losing these companies, the tax the pay and the jobs they supply. Your idea is greed only..just he happy we have them here and try billions the do pay that we’d other wise not have.!

What about introducing a benevolence tax of 5% or even voluntary donation from the mnc’s? If it was voluntary they could alter it in line with how they are doing financially each year and would also show how committed they are towards Ireland’s recovery and as a country.
Just a thought.

Good article. The impression is given by those who say don’t touch CT, that we have reached some sort of utopian tax rate of 12.5%. Such to the point that if low CT was the primary driver for attracting FDI then it stands to reason we should lower it further. But even that debate is not allowed, as the article points out, our CT is not on the table.
Truth is, CT is one element of many that attracts FDI – education, easy access to ports, affordable labour costs, EU membership, etc,etc.
Estonia has an effective CT rate of 0%, yet it cannot touch the level of FDI that we get.

Article is irrelevant. Corpo tax must remain as is to prevent jobs and exports. Increasing it will only lead to another “dell” scenario in limerick where thousands lost their jobs overnight when dell pulled out. Just see what would happen in leixlip if intel pulled out. Grow up!

Former imperial powers like Britain and France enjoy advantages in trade and resources we will never have. This is a small island on the edge of Europe. The corporate tax rate gives us an advantage we need. Also the bailout of banks, particularly German ones, under the previous set of traitors, show we owe nothing to Europe.

corporate tax is this country means they pay 3 percent, and that’s a fact not fictional, it has been found and recorded on more than one occasion,, they will do anything to bring company’s here, give them grants, give them grants to expand, money for new machinery, and then they move it all abroad after their 10 years are up, happened in every factory in tralee, each was outfitted with new machinery, gone to china, Poland , and our president mary went over to china to open up new dimplex factory, after loosing jobs here,, ain’t right we lost jobs in our town and then had to spend for a trip to china,, we are a corrupt country, with no leaders only leeches who wont touch their own overpaid salary’s , pensions and expenses, but hit the low man on the totem

One point thats often missed is that the tax regime here disappates once a company becomes unprofitable. This is why MNCs desert Ireland in droves once the full cost of doing business here becomes apparent.
My real issue, however, is how this disincentivises growing and therefore loss-making businesses from incubating here before they become profitable. A fairer regime would take all costs and all expenditure in this country into account. One of the biggest problems is of course the fact that very high costs of doing business to start with is a massive disincentive unless huge tax breaks are offered – why not reduce the cost of doing business instead and even out the cost over many years so companies don’t just come in good times and abandon ship in a bust.

I’m no fan of Michael Taft, but if all options are on the table then a 2.5% increase in corporation tax seems pretty reasonable to me. No more than 2.5% though.

Higher corporate tax does not incapacitate the German or UK economies, so how would it affect Irelands when the author states there is over 2.5x’s the movement over other EU states? nnIt is immoral that MNC’s can transfer and dodge their taxation responsibilities. They use people who were educated by a system that requires funding, a transport network and a social and physical infrastructure to enable their productivity. PAYE, national insurance and social charge do not pay for the upkeep of the infrastructure. nnI think it is repugnant that they are allowed to legally scam their way into obscene levels of profitability while child poverty rises in a country that has lost its sovereignty to robber barons. As for the argument for job creation, over 20% of jobs are filled from abroad. My guess is that figure is far higher. nnI suppose its better to suffer the psychosis of national bankruptcy and bailout upon bailout than demand billions in corporate tax.