Corporation Tax - Will it rise

Buford T Justice

So, seen as how its official and all that we are getting a bailout from the EU & IMF, what do people think about the chances of Corporation Tax increases?

I think its very likely for the following reasons:
1) The Government have categorically stated that there will be absolutely no change in the Corporation Tax rate.
If you ask me, thats enough of a signal that it'll change. Personally, I think they'll spin it, and say that it was said at the time with the best information to hand.

2) The rest of Europe want it increased. Now, I know that the IMF can't directly increase the tax, but there's nothing to say that "We'll give you this 15bn, but in return, it would be extremely desirable if the corporation tax were to be raised" They can definitely put the squeeze on the government to bring them around to their thinking, since they have the cash and all.

3) The government have a history of making fantastically terrible decisions on critical issues, and as this goes, it'd be another great decision for them to cock up.


Anyone else have any thoughts?

Shiny

To be honest I would be amazed if they agreed to allow an increase in Corporation Tax.

wylo

The IMF dish out money with the expectation of making a profit from it, increasing this tax would do nothing but hinder the chances of them getting it back surely.
Im still unsure WHO exactly were getting the money from?? But if it was solely an IMF loan then I cant see it being risen. But if we're being bailed out in a manner similar to Greece then maybe they will want to see a small rise alright.

I just cant see it happening soon though.

Dannyboy83

Won't happen, would lead to Irish default and collapse of the Eurozone.

SkepticOne

I doubt it will rise. It is the one thing the government will hold on to. Other European countries also want Ireland to take the bailout as a banking or sovereign debt crisis could spread to larger economies. Although risky, this is a possible bargaining chip for Ireland which I think they will use if the corporation tax issue is raised.

LostPassword

100% certain to rise. It's an EU bailout and Ireland is effectively allowing US corporations to operate within the EU tariff walls without paying the going rate - strategically, politically, economically it's really the only thing that the EU powers care about with respect to Ireland's economy.

If you don't realise this, you don't understand anything at all about the political framework in which we operate. Why would the EU allow US corporations to continue to send so much wealth back to the EU's major economic and strategic rival when they have us by the balls?

Scofflaw

LostPassword wrote: »

100% certain to rise. It's an EU bailout and Ireland is effectively allowing US corporations to operate within the EU tariff walls without paying the going rate - strategically, politically, economically it's really the only thing that the EU powers care about with respect to Ireland's economy.

If you don't realise this, you don't understand anything at all about the political framework in which we operate. Why would the EU allow US corporations to continue to send so much wealth back to the EU's major economic and strategic rival when they have us by the balls?

Because if we refuse a bailout, we'll cause major damage to everybody.

Also, about the last thing those US corporations do with their money is bring it back to the US.

cordially,
Scofflaw

wylo

LostPassword wrote: »

If you don't realise this, you don't understand anything at all about the political framework in which we operate. Why would the EU allow US corporations to continue to send so much wealth back to the EU's major economic and strategic rival when they have us by the balls?

Because ruining our country means either kicking us out of the Eurozone and them getting no money back, or keeping us in and destroying the Euro.
Im sure they'd love to see it rise , but I just dont know if its possible.
What else have we as a country to fuel the economy? We need new massive Irish owned exporting industrys.

sirromo

It seems corporation tax is still on the agenda
http://www.irishtimes.com/newspaper/ireland/2010/1122/1224283834966.html

FRENCH AND German officials have contradicted the Government assertion that Ireland’s 12.5 per cent corporation tax is off the agenda in any negotiations over financial aid for Ireland.

Speaking ahead of last night’s Government press conference at which the Taoiseach said the issue of corporation tax does not arise, a a spokesman for Jean-Claude Junker, the chairman of the Euro Group, said that the matter was not off the the agenda as a number of euro zone states wanted to discuss it.

French officials were also briefing yesterday that it should be up for discussion despite comments made by French president Nicolas Sarkozy at this weekend’s Lisbon summit.

Mr Sarkozy said he anticipated Ireland would raise its corporate tax rate, but that this would not be made a condition for any bailout.

However, Le Figaro quoted a French official as saying: “Several European states, including France, pointed out that if Ireland has to be told to raise its revenues, the corporate tax rate leaves room for progress.”

Amhran Nua

sirromo wrote: »

It seems corporation tax is still on the agenda
http://www.irishtimes.com/newspaper/ireland/2010/1122/1224283834966.html

Well keep in mind that the Germans have their own political issues at home, a comment of this sort shouldn't neccessarily be taken at face value. As for Sarkozy, he had to come to Ireland hat in hand on a "charm offensive" after he openly threatened the country after the first Lisbon referendum failed, so I'd take his statements with a pinch of salt, or at least moreso than some French officials are doing.

Mister men

Of course it will. I expect a 15% rate to be announced this week.

Fianna Downfall

The latest is that there is no pressure on it.

optocynic

Scofflaw wrote: »

Because if we refuse a bailout, we'll cause major damage to everybody.

Also, about the last thing those US corporations do with their money is bring it back to the US.

cordially,
Scofflaw

That is very true, but since the money is to come in traunches, can't they give us 1 or 2, and then dangle 3 and 4 in front of us, under the condition that the corporation rate increases?

limklad

Scofflaw wrote: »

Because if we refuse a bailout, we'll cause major damage to everybody.

Also, about the last thing those US corporations do with their money is bring it back to the US.

cordially,
Scofflaw

When Bush offered an Tax Amnesty for reparation in 2004. There is nothing to prevent the US from doing the same again from an International perspective.

US based Multi-national Companies are pushing for a Corporate Tax Amnesty again. They are worried.

finfacts.ie wrote:

http://www.finfacts.ie/irishfinancenews/article_1020811.shtml
In 2004, the Homeland Investment Act cut the tax rate to 5.25% and an estimated $362bn was returned by 843 companies according to the Internal Revenue Service.

FT.com wrote:

http://www.ft.com/cms/s/0/5b852bce-db0e-11df-a870-00144feabdc0,s01=1.html#ixzz161LaACBe

“A trillion dollars is hard to turn your back on,”

Now would you want your money in Irish or American banks right now?
If I was an Multi-national I be thinking of withdrawing my money right now from Ireland/Portugal/Spain/Italy and moving it else where regardless of what our Corporate Tax Rate is right now or will be.
For US Government, it is an easy ripe time for a Tax Amnesty to fill it Coffers with tax on $1,000bn.

Timistry

Not a chance. The ECB want to get paid and raising CT will destroy our tax base and lead to default

oppenheimer1

There will probably be no specific mention of CT as a string attached to the loan. However in 7 to 10 years time when the economy hopefully has stabilised and is functioning "normally" it will rise. A "gentlemans agreement" if you prefer.

eeloe

I honestly hope a "gentlemans agreement" is the outcome from all of this!

The MNC's are all that's keeping us going, if it wasn't for them, the unemployment rate would soar....

If the corp tax rises gradually over 7-10 years it will work out much better, as everyone will have scope to prepare for what is going to happen!

LostPassword

They negotiated a face-saving 'gradfathering' agreement (existing corps are safe) and phased general increases. Which is about the best that could be hoped for. Probably a bigger deal is the new arrangements on transfer pricing and financial oversight - I figure that the IFSC is now officially dead.

Amhran Nua

LostPassword wrote: »

They negotiated a face-saving 'gradfathering' agreement (existing corps are safe) and phased general increases. Which is about the best that could be hoped for. Probably a bigger deal is the new arrangements on transfer pricing and financial oversight - I figure that the IFSC is now officially dead.

Have you one single source for this comment, or are we back in rumourland again.

LostPassword

Amhran Nua wrote: »

Have you one single source for this comment, or are we back in rumourland again.

Yeah, I realise that it is just a rumour from your pov and the best I can give as a public source is the comments of mr Rehn on RTE today:

When asked in an interview with RTÉ if the corporate tax rate was now off the table for good, Mr Rehn said that by Ireland's ceasing to be a low tax country, this did not imply specific measures, but 'it is likely unfortunately to imply tax increases'.
....

Meanwhile, the AFP news agency has quoted an EU source as saying that the Government is willing to widen its corporation tax base in exchange for an international financial rescue, but without changing the 12.5% rate.

'Ireland is considering enlarging the tax net for companies' even if the percentage 'will not change,' said the source, who AFP said was close to a fifth day of EU-IMF negotiations with Ireland.


http://www.rte.ie/news/2010/1122/imf-business.html

"Widen its tax net" is code for cutting down on dodgy accounting / transfer pricing practices.

If you read some of the financial press commentary about the negotiations, you can also parse out the rough shape of the detail if you know how to do such things.

But, I definitely do not have a source, so feel free to ignore it if you like. Time will tell.

Amhran Nua

LostPassword wrote: »

Yeah, I realise that it is just a rumour from your pov

From what point of view? You pulled an imaginary idea directly from thin air, and backed it up with an article you repeatedly selectively quote, which says nothing at all like you are claiming.

When asked in an interview with RTÉ if the corporate tax rate was now off the table for good, Mr Rehn said that by Ireland's ceasing to be a low tax country, this did not imply specific measures, but 'it is likely unfortunately to imply tax increases'.

...

Meanwhile, the AFP news agency has quoted an EU source as saying that the Government is willing to widen its corporation tax base in exchange for an international financial rescue, but without changing the 12.5% rate.

LostPassword wrote: »

you can also parse out the rough shape of the detail if you know how to do such things.

Seeing as you're an expert financial interpreter, can you see your way clear to linking to the exact financial commentary you refer to so?

dreenman

It seems to me that for all the advantages the low corporation tax brings it also played a role in the current crisis.

Correct me if I'm wrong but surely the banks and developers benefited hugely from the 12.5 % tax rate which in turn fueled and encouraged their unsustainable growth.

Its great that we can get tax revenue from foreign (esp US) multinationals who launder their European profits through Ireland and avoid paying tax at USA or UK/European rates but surely that only makes us a larger version of the Isle of Man which I dont think is enough to sustain our population.

LookingFor

Serious rumour warning here, but a relative of mine who works in a position that brings him in contact with a lot of people in Brussels told me tonight that according to a contact he has in the German treasury, Ireland will raise its corporation tax rate to 15% in January.

I don't want to believe that, and he's in a position where he hears lots of different things at a time like this, but assuming it were true, how would that even happen? Surely it would have to come out with any deal as a term of the deal, and come out for the budget?

Meanwhile, on the record, Juncker has said that corporation tax is STILL a matter for discussion. Says he: 'We'll see in the course of the establishment of the programme if some progress can be achieved in that field.' I guess progress for him would be a rise in rate

Would FF really have NOT secured this before agreeing to apply?

Amhran Nua

LookingFor wrote: »

Serious rumour warning here, but a relative of mine who works in a position that brings him in contact with a lot of people in Brussels told me tonight that according to a contact he has in the German treasury, Ireland will raise its corporation tax rate to 15% in January.

Sigh. In case anyone missed the bulletin, starting rumours can only cause problems on the markets, not in making national policy.

newmug

Not a rumour. I heard this from the horses mouth. I work for one of these famed MNC's, and our boss called a meeting the other day to tell us that it was NOT being touched.

robbyvibes

A 2-3% increase seems feasible.

Sarkozy said he expected it to go up and based solely on his remark, i believe it will.