Kenny's own goal?

thebman

Caustic behind closed doors, Mr Sarkozy was low-key in public: Ireland had to “make a gesture” if it wanted a deal. Mrs Merkel, more measured within, was dismissive in her comments to the press: “We weren't very pleased with what the Irish had to offer.”

In the eyes of the Irish government, this is the story of a bankrupt but proud small country standing up to unreasonable bullying by the giants of the EU. Might Ireland sign up to the idea of a common base to calculate corporation tax, which will be formally proposed by the European Commission tomorrow (March 16th)? No, said Mr Kenny. This would be the “back door” to tax harmonisation, he said, even though he had signed up to the “pact for the euro” that makes reference to the possibility of a common tax base.

Well-placed sources say Mr Kenny was offered an easier way out. At his late-night press conference, Herman Van Rompuy, the president of the European Council who chaired the meeting, made an intriguing comment that did not get much attention at the time: he said Ireland had not been asked to move either on the tax rate or tax base; it only had to promise “constructive engagement on tax co-ordination” on the basis of pact.

The word in Brussels is that Mr Van Rompuy himself drafted this phrase. "Could it be any softer?" asks one eurocrat. Indeed, in the universe of EU summits, this would have been an almost meaningless commitment: one can engage constructively but in the end refuse to accept any hint of tax harmonisation. Had he signed up to such empty words, runs the argument in Brussels, Mr Kenny could have brought home a reduction in Ireland's interest rate - an early victory less than a week into his prime-ministership.

The question is whether such a free pass was really on offer. Mr Van Rompuy may have suggested the phrase, but sceptics reckon that France and Germany would not have been satisfied with so little. Perhaps so. But there is no evidence that Mr Kenny even tested the proposition.

Elected on a promise to defend Ireland's low-tax model, Mr Kenny evidently felt he could not even be seen to talk about the possibility of making a concessions (the British, equally allergic to tax harmonisation, are politely negotiating the possible terms of a common tax base).

Mr Kenny opted to play for time, wait for the result of stress tests on Irish banks and try to find a deal at the next summit on March 24th-25th.

http://www.economist.com/blogs/charlemagne/2011/03/ireland_and_euro_zone

Been impressed with Enda so far but I hope it wasn't as easy as this to get a lower interest rate.

Me thinks Sarkozy would not have accepted it anyway given his public comments but who knows...

It reads bad that he never even tested the waters on it but we will have to wait and see if this is what happened or not.

Nice that the Irish Independent instead of an article like this, posted about Enda being referred to as Edna again. Make of that what you will (its a trash newspaper :P).

ei.sdraob

What does corporation rate or taxation have to do with the banking problem and the bailout?

Why are the EU wasting time on this instead of trying to address the core issue of banks being dumped on taxpayers.

Scofflaw

ei.sdraob wrote: »

What does corporation rate or taxation have to do with the banking problem and the bailout?

Why are the EU wasting time on this instead of trying to address the core issue of banks being dumped on taxpayers.

Because that latter is - or rather was - a decision for the Irish government, not the EU. The idea of us providing some kind of commitment on - or 'reference to' - corporation tax is a political issue, because the taxpayers of the donor countries are asking why they're forking over money to us when we won't raise more ourselves.

On the OP - interesting, because that was something mentioned in earlier articles:

A spokesperson for the Government said this meant that Ireland had not agreed to issues relating to 'tax coordination' as they appeared in the pact on improving competitiveness within the eurozone.

A draft version of the new 'Pact for the Euro' recommended that member states should commit to engaging in 'structured discussions on tax policy issues,' and that a common corporate tax base could 'contribute to fiscal sustainability and the competitiveness of European businesses.'

However, speaking to reporters afterwards the Taoiseach said: 'The question was being asked to make references (within the pact) to our corporation tax rate. I made it clear that I could or would not contemplate this and I didn't this evening.'

That suggests that “constructive engagement on tax co-ordination” was what was on the table, because nothing else solid has ever been put forward as the discussion position of the other countries.

As I've said before, I don't really understand the absolutism of Irish opposition to anything related to corporation tax. “Constructive engagement on tax co-ordination” is barely anything - why is it not possible to even contemplate making such a reference?*

cordially,
Scofflaw

* other than the remarkably ill-informed debate and scaremongering that would undoubtedly follow, of course

Dannyboy83

Scofflaw wrote: »

Because that latter is - or rather was - a decision for the Irish government, not the EU. The idea of us providing some kind of commitment on - or 'reference to' - corporation tax is a political issue, because the taxpayers of the donor countries are asking why they're forking over money to us when we won't raise more ourselves.

But that's illogical.
An increase in our CTR, or changes in the CCCTB which reduce our income - simply means they have to loan us even more money.
And they're loaning it to us. Not giving it.

Scofflaw

Dannyboy83 wrote: »

But that's illogical.
An increase in our CTR, or changes in the CCCTB which reduce our income - simply means they have to loan us even more money.

As I've pointed out before, under the pro-market Anglo-Saxon view of how taxation works, that's an unchallenged fact. But the majority of Europeans don't subscribe to that model - that's why they have high taxes. Outrageous and bizarre as it seems to us, their view is that we could raise more taxes by raising corporation tax.

Dannyboy83 wrote: »

And they're loaning it to us. Not giving it.

Sure - but then we're not simply giving the banks money - they're supposed to pay it back.

Do you see the similarity?

cordially,
Scofflaw

ei.sdraob

Scofflaw

where have the taxpayers of donor countries have asked to raise corpo tax?


* raising corporation tax will not raise more money if anything it would cripple the economy
* there are much easier low hanging fruit to pick, the taxpayers in other countries did make noise about our welfare levels and politicians pay


the taxpayers of this country are asking why do they have to fork over money for banking debts which have been made theirs.

Dannyboy83

Scofflaw wrote: »

As I've pointed out before, under the pro-market Anglo-Saxon view of how taxation works, that's an unchallenged fact. But the majority of Europeans don't subscribe to that model - that's why they have high taxes. Outrageous and bizarre as it seems to us, their view is that we could raise more taxes by raising corporation tax.

Why did these companies not come to Ireland before we attracted them here with the CTR?
And we have several multinationals on record as saying that changes in the CTR will lead them to evacuate Ireland.

So the Europeans are mistaken if they think that; And that's not so much our problem as it is their problem:
A) We will lose our ability to repay them,
They have to loan us more money, and these highly mobile MNLs will just take their business to another low tax destination. Everybody loses.
C) The only way around it is complete tax harmonization within the EU.

Sure - but then we're not simply giving the banks money - they're supposed to pay it back.

Do you see the similarity?

Honestly, I don't.
Their position seems totally irrational to me.

The reason we are fighting so hard to keep this CTR, is precisely so that we can pay the Europeans back.
If we didn't intend to repay them, why would we bother fighting to keep it at all? We could just give up all our competitiveness and industry and rely on their handouts instead.

I don't think it is us who need to look beyond our model in this case, I think it is the Europeans who need to look beyond their own model.

Dannyboy83

ei.sdraob wrote: »

* there are much easier low hanging fruit to pick, the taxpayers in other countries did make noise about our welfare levels and politicians pay

This is the point I don't understand.

If the Europeans really are so very bothered about having to loan us their money; why don't they tackle our outrageous state sector spending?

The guaranteed yield from reforming Irish state sector spending would be far more dramatic than any potential yield from CTR/CCCTB alterations.

Scofflaw

ei.sdraob wrote: »

Scofflaw

where have the taxpayers of donor countries have asked to raise corpo tax?

Taxpayers don't ask such things as such, but it's possible to look at the public debate in those countries in the same way as here, what with the Internet and all.

ei.sdraob wrote: »

* raising corporation tax will not raise more money if anything it would cripple the economy
* there are much easier low hanging fruit to pick, the taxpayers in other countries did make noise about our welfare levels and politicians pay

Yes, I know that's your view. My point is that other European countries don't actually subscribe to that viewpoint. The reason they don't go after our welfare levels is because they don't regard high spending on public services as something wrong.

ei.sdraob wrote: »

the taxpayers of this country are asking why do they have to fork over money for banking debts which have been made theirs.

Because the Irish government made them so through the Guarantee of September 2008. That's pretty much a matter of record, I'd have thought.

cordially,
Scofflaw

ei.sdraob

I am still trying to find anything that suggests the people of europe have lobbied their politicians about Ireland's corporation rate

That is a rather large claim made there by Scofflaw i would like to see it backed up , instead of just thrown in the there and hope it sticks.

I see plenty of articles about Europeans giving out about our politicians pay and welfare rates but nothing about corporation taxation.



Our problems have nothing to do with corporate taxation
this needs to be repeated until it sinks in, that more time is being wasted on a side issue that did not cause the problems.

Scofflaw

Dannyboy83 wrote: »

This is the point I don't understand.

If the Europeans really are so very bothered about having to loan us their money; why don't they tackle our outrageous state sector spending?

The guaranteed yield from reforming Irish state sector spending would be far more dramatic than any potential yield from CTR/CCCTB alterations.

I don't think it is us who need to look beyond our model in this case, I think it is the Europeans who need to look beyond their own model.

No, really, it's quite possible for people to believe something other than the prevailing Anglo-Saxon model of economic wisdom - particularly when the countries requiring bailouts are those that subscribed more strongly to that wisdom, while those in a position to provide the bailouts are those that subscribed less strongly to it.

Most Europeans really genuinely do not believe that low taxes and low spending on public services are good things. They really do believe that you need high taxes and high public spending. That's why they challenge our low taxes rather than our high public spending.

cordially,
Scofflaw

ei.sdraob

Scofflaw wrote: »

Taxpayers don't ask such things as such, but it's possible to look at the public debate in those countries in the same way as here, what with the Internet and all.

I can not find a single reference, please enlighten us.

Scofflaw wrote: »

Because the Irish government made them so through the Guarantee of September 2008. That's pretty much a matter of record, I'd have thought.

cordially,
Scofflaw

While the countries national debt is lumped in together with the bank debt the country will continue to be seen as a basketcase

The financial crisis was sparked by worries in the market of which institutions held toxic assets that are worthless
The current sovereign crisis is directly fueled by the banks and the state being seen as a toxic one.

Fratton Fred

ei.sdraob wrote: »

Scofflaw

where have the taxpayers of donor countries have asked to raise corpo tax?


* raising corporation tax will not raise more money if anything it would cripple the economy
* there are much easier low hanging fruit to pick, the taxpayers in other countries did make noise about our welfare levels and politicians pay


the taxpayers of this country are asking why do they have to fork over money for banking debts which have been made theirs.

Vodafone UK is currently experiencing ongoing demonstrations. A couple of weeks ago they lost their entire network in the Reading area due to vandalism at a data centre (i think someone stole the HLRs and other bits of kit that knocked out a whole host of users).

This is because of a tax avoidance deal they have done with HMRC. The reason HMRC have given these special concessions is because Vodafone is constantly threatening to move its head office to Dublin.

Curragh I hear you call, more jobs. Well, yes, but they would only need to move about 12 jobs to Sandyford to avoid millions in tax.

Vodafone are one if the largest payers of tax in the UK. How pleased do you think the UK government is with a tax haven on its doorstep potentially pinching tax revenue from it, whilst sat their with their hand out asking for a cheap loan.

EoghanConway

ei.sdraob wrote: »

Our problems have nothing to do with corporate taxation
this needs to be repeated until it sinks in, that more time is being wasted on a side issue that did not cause the problems.

Oh come on, you just want to repeat a mantra until they relent? Why not consider looking at it from their point of view? Sorry to butt in but that's just silly.

ei.sdraob

Fratton Fred wrote: »

Vodafone UK is currently experiencing ongoing demonstrations. A couple of weeks ago they lost their entire network in the Reading area due to vandalism at a data centre (i think someone stole the HLRs and other bits of kit that knocked out a whole host of users).

This is because of a tax avoidance deal they have done with HMRC. The reason HMRC have given these special concessions is because Vodafone is constantly threatening to move its head office to Dublin.

Curragh I hear you call, more jobs. Well, yes, but they would only need to move about 12 jobs to Sandyford to avoid millions in tax.

Vodafone are one if the largest payers of tax in the UK. How pleased do you think the UK government is with a tax haven on its doorstep potentially pinching tax revenue from it, whilst sat their with their hand out asking for a cheap loan.

Half of the world tax havens are British territories and these places have no corporate taxes
I dont see them worried about these?
This channel 4 documentary goes even further and ties current Westminster politicians to offshore structures

EoghanConway wrote: »

Oh come on, you just want to repeat a mantra until they relent? Why not consider looking at it from their point of view? Sorry to butt in but that's just silly.

whose point of view? the european politicians or european people?? i am still waiting on Scofflaw to backup his claim.

Scofflaw

ei.sdraob wrote: »

I am still trying to find anything that suggests the people of europe have lobbied their politicians about Ireland's corporation rate

That is a rather large claim made there by Scofflaw i would like to see it backed up , instead of just thrown in the there and hope it sticks.

I see plenty of articles about Europeans giving out about our politicians pay and welfare rates but nothing about corporation taxation.

It's perfectly possible to find plenty of public articles from Germany and France about our corporation tax - just do a search for "Körperschaftsteuer" or "impôt sur les sociétés" and Ireland. You can then see for yourself the place our corporation tax occupies in public debate in those countries.

ei.sdraob wrote: »

Our problems have nothing to do with corporate taxation
this needs to be repeated until it sinks in, that more time is being wasted on a side issue that did not cause the problems.

I'm not sure what the relevance of that is, though. I don't think anyone is claiming that our low CT rate was the cause of the problem. Our intransigence on any issue of corporation tax - rate, base, even a mention - is, however, being put forward as a quid pro quo for movement on the conditions of the bailout fund.

The question on this thread is whether Kenny's defence of our corporation tax arrangements goes all the way to refusing to even contemplate an extremely weak statement that Ireland will "constructively engage" with tax base harmonisation - and if so, why?

cordially,
Scofflaw

ei.sdraob

Scofflaw wrote: »

I'm not sure what the relevance of that is, though. I don't think anyone is claiming that our low CT rate was the cause of the problem. Our intransigence on any issue of corporation tax - rate, base, even a mention - is, however, being put forward as a quid pro quo for movement on the conditions of the bailout fund.

cordially,
Scofflaw

If corporation taxation did not get us in this mess

Then it gives much weight to claims that the "bailout" is not there to help us or address the issues that got us here

But to punish us (for decisions made by politicians mind you)



I hope the Germans haven't forgotten that their country was split in half with the West helping rebuild the Western part and and not punish their people with reparations, while the East Germany was asset stripped by the Soviets whose main aim was to extract as much as possible from their new territory.

sarumite

Fratton Fred wrote: »

How pleased do you think the UK government is with a tax haven on its doorstep potentially pinching tax revenue from it, whilst sat their with their hand out asking for a cheap loan.

When Britian dropped their VAT to 15% which caused a flood of Irish shoppers up north boosting the British Economy, I don't think it would be Ireland business to dicate their tax policy....I have the same opinion on this one.

ei.sdraob

Why not consider looking at it from their point of view?

Ok lets consider it so

Lets say the tables where turned and it was the French politicians who screwed up and the proceeded to dump the banking mess onto the French people, who are then pushed to take a bailout due to so much debt.
What right would Enda Kenny has in telling the French to change policies such as retirement, lets say make it 70? in exchange for a high interest loan mind you, helping implies an act in kindness with no return btw.

@Scofflaw you have argued before that no member state or collection of states have the right to gang up on any other state and demand change in internal tax policies.
Why change the tune now?

Why is the EU not focusing on issues that got us here, such as no enforcement of regulations and making bank debt public?

Scofflaw

ei.sdraob wrote: »

If corporation taxation did not get us in this mess

Then it gives much weight to claims that the "bailout" is not there to help us or address the issues that got us here

But to punish us (for decisions made by politicians mind you)



I hope the Germans haven't forgotten that their country was split in half with the West helping rebuild the Western part and and not punish their people with reparations, while the East Germany was asset stripped by the Soviets whose main aim was to extract as much as possible from their new territory.

It gives no such weight, and that's frankly a daft argument, which as far as I can see is brought about by an inability to understand that there is another view on taxation.

I'll try again:

1. most countries of "Old Europe" have high tax/high public spending economies.

2. they have these because they believe that high public spending is a good thing, and requires high taxation to pay for it

3. they look at our high public spending, and they don't see a bad thing

4. they look at our low taxation, and they see a way in which we are not bringing in as much tax money as we could

5. then they look at the fact that they're lending us money to keep public spending high

6. and they wonder why we don't raise our taxes in order to be able to afford it, rather than borrowing the money form them

Really, it's not complicated - there is another viewpoint. They're not trying to "punish" us by suggesting we raise our taxes - it's what they would do, and they believe it would help close the gap in our finances they're currently funding.

cordially,
Scofflaw

Boskowski

Scofflaw wrote: »

Most Europeans really genuinely do not believe that low taxes and low spending on public services are good things. They really do believe that you need high taxes and high public spending. That's why they challenge our low taxes rather than our high public spending.

cordially,
Scofflaw

I'm not sure I can subscribe to that viewpoint entirely.

When I look at Germany a lot of the supposedly high spending goes into projects, let it be infrastructure, public transport, let it be whistles & bells health systems. We in Ireland have a high public expenditure but don't have much to show for in those areas.

I don't think Germans find it reasonable that a small country like ours has such a high welfare and publis service bill and they certainly don't aspire to achieve the same levels in those areas themselves. If anything welfare spending has gone through a long period of rather draconian cutbacks in Germany at the end of which we seem now more 'competetive'.

But don't get me wrong - I'd be suprised if Germans in general or even German politicians aspire to demand policy implementations from Ireland. It may be the fashionable thing to accuse Germany of the exact opposite at the moment, but I don't believe Germany has any desire to tell Ireland how to run their country.

As it happens if you told some German guy about the perceived intrusion on Ireland, if you told him 'Angela wants us to cut our corporation tax for the bailout', he'd go 'is she?'. I don't see where Ireland is actually stealing business from Germany with its low corpration tax tbh and the subject simply doesn't feature in the public, in the news or anywhere for that matter.

What I'm saying is ,I don't think anyone in Germany cares how we get our house in order, but they do care that indeed we do get our house in order. Because against what most people think Germany has enough debt of their own and haven't had a balanced budget since - not sure exactly - some time in the late fifties. So they're not keen paying for Irish overrun budgets.

I'm actually beginning to wonder if this whole corporation tax debate is some sort of red herring by which we convince ourselves how strongly we stand while in truth Europe pursues this - if anything - rather half-heartedly and more from a tax harmonisation angle and not from a 'you stealing our business' angle. Of course it would suit our politicians to push this as they can create a strong profile as preservers of the tax rate for themselves.

Boskowski

ei.sdraob wrote: »

I hope the Germans haven't forgotten that their country was split in half with the West helping rebuild the Western part and and not punish their people with reparations, while the East Germany was asset stripped by the Soviets whose main aim was to extract as much as possible from their new territory.

Well, you can scrap that 'the West' thing. Only for the Americans we'd all be potatoe farmers in Germany, that's what the Brits had in mind for us.

But....what's that got to do with anything and especially with Ireland?

Scofflaw

ei.sdraob wrote: »

Ok lets consider it so

Lets say the tables where turned and it was the French politicians who screwed up and the proceeded to dump the banking mess onto the French people, who are then pushed to take a bailout due to so much debt.
What right would Enda Kenny has in telling the French to change policies such as retirement, lets say make it 70? in exchange for a high interest loan mind you, helping implies an act in kindness with no return btw.

If we were loaning them the money to do so, and they were asking for a further reduction in the interest rate below market rates, I can't see why we wouldn't expect to get something for that.

ei.sdraob wrote: »

@Scofflaw you have argued before that no member state or collection of states have the right to gang up on any other state and demand change in internal tax policies.
Why change the tune now?

Because as far as I can see they're not doing so. Sarkozy has the right to make noises about Ireland's CT rate if that's something he has a bee in his bonnet about - but there's a complete absence of any concrete demand for a rise in our tax rates. What seems instead to be on the table - both from this article and others - is allowing the rest of Europe to move on CCCTB, which Ireland's dogged opposition prevents any movement on.

ei.sdraob wrote: »

Why is the EU not focusing on issues that got us here, such as no enforcement of regulations and making bank debt public?

Those will require treaty changes - and currently nobody is likely to look at that before 2013. On the other hand, there have been a series of public consultations by the Commission on exactly those issues, and the view is very much that burden-sharing will be part of any permanent bailout arrangement.

cordially,
Scofflaw

Fratton Fred

sarumite wrote: »

When Britian dropped their VAT to 15% which caused a flood of Irish shoppers up north boosting the British Economy, I don't think it would be Ireland business to dicate their tax policy....I have the same opinion on this one.

The vat reduction wasn't designed so that Sainsburys could earn a few quid though. The Irish tax rate is designed to attract people here from other European countries.

Dannyboy83

Scofflaw wrote: »

No, really, it's quite possible for people to believe something other than the prevailing Anglo-Saxon model of economic wisdom - particularly when the countries requiring bailouts are those that subscribed more strongly to that wisdom, while those in a position to provide the bailouts are those that subscribed less strongly to it.

So, what it actually boils down to is that........... we throw a spanner into their working model by being low tax.
So they are smashing off the bits around our rectangular shape, in order to fit us through their circular hole.

They have to smash our model in order to make their model function properly.
Doesn't sound like their model is that superior after all.


Hong Kong subscribes to the Anglo-Saxon model far more strictly than Ireland or the UK.
Hong Kong seems to be doing well.


Following the model hasn't been the problem for Ireland.
Not following it has. i.e. socialising all those losses.

Besides, many of the countries which subscribe more strongly to the Socialist model are also in serious trouble.

So again, it comes back to the countries which are doing ok being the ones which have the natural advantages, and always had them.
And the ones who are doing poorly (not ignoring our own mismanagement) are the countries which don't have the natural advantages. The Peripheral countries, which is the very reason we ever needed a low CTR to begin with.

Most Europeans really genuinely do not believe that low taxes and low spending on public services are good things. They really do believe that you need high taxes and high public spending. That's why they challenge our low taxes rather than our high public spending.

Most Europeans live on the continent, not an island - live in countries with mammoth indigenous industries e.g. Siemens, which established themselves during the 19th century.
Most Europeans don't live on a peripheral island off the coast of Europe which has feck all in the way of industry, and feck all in the way of reason to attract industry.

Their model works fine for where they are.
Clearly, it is not working where we are.

ei.sdraob

Boskowski wrote: »

But....what's that got to do with anything and especially with Ireland?

It has alot to do with this and Ireland.


The arguments on this forum go like this:
* Irish people voted FF
* FF mismanaged the country with some Irish people going along for ride, initially giving an appearance of "good times"
* FF during a crash which they helped build dumped the banks onto the Irish people
* Irish people == Irish state == Irish banks
hence its the fault of Irish people, who now how to cleanup the mess and pay a high interest loan as punishment


Now lets compare it to this:
* German people voted into the Nazis
* Who helped the economy along, with more German people joining/supporting them them
* The Nazis then went on rampage
* German people == Nazi party == bad
hence WW2 was the fault of German people who now get a Marshall Plan in the West part instead of reparations



The average Irish person is not responsible for this mess anymore than the average German was responsible by atrocities carried out in WW2, yes "some" people got involved but not everyone.

So to make "all" Irish people pay for the mistakes of a few is punishment.

Scofflaw

Boskowski wrote: »

I'm not sure I can subscribe to that viewpoint entirely.

When I look at Germany a lot of the supposedly high spending goes into projects, let it be infrastructure, public transport, let it be whistles & bells health systems. We in Ireland have a high public expenditure but don't have much to show for in those areas.

I don't think Germans find it reasonable that a small country like ours has such a high welfare and publis service bill and they certainly don't aspire to achieve the same levels in those areas themselves. If anything welfare spending has gone through a long period of rather draconian cutbacks in Germany at the end of which we seem now more 'competetive'.

But don't get me wrong - I'd be suprised if Germans in general or even German politicians aspire to demand policy implementations from Ireland. It may be the fashionable thing to accuse Germany of the exact opposite at the moment, but I don't believe Germany has any desire to tell Ireland how to run their country.

As it happens if you told some German guy about the perceived intrusion on Ireland, if you told him 'Angela wants us to cut our corporation tax for the bailout', he'd go 'is she?'. I don't see where Ireland is actually stealing business from Germany with its low corpration tax tbh and the subject simply doesn't feature in the public, in the news or anywhere for that matter.

What I'm saying is ,I don't think anyone in Germany cares how we get our house in order, but they do care that indeed we do get our house in order. Because against what most people think Germany has enough debt of their own and haven't had a balanced budget since - not sure exactly - some time in the late fifties. So they're not keen paying for Irish overrun budgets.

I'm actually beginning to wonder if this whole corporation tax debate is some sort of red herring by which we convince ourselves how strongly we stand while in truth Europe pursues this - if anything - rather half-heartedly and more from a tax harmonisation angle and not from a 'you stealing our business' angle. Of course it would suit our politicians to push this as they can create a strong profile as preservers of the tax rate for themselves.

I think that's all pretty accurate - what it seems Europe would like is movement on the current proposal for an optional CCCTB. For reasons that I still can't really grasp, Ireland is deeply, deeply opposed to such a system the reasons given, though, are often contradictory and/or irrelevant.

The principal opponent of CCCTB in Ireland seems to be IBEC. IBEC's principal funders are the banks, oddly enough, and then the semi-states:

The figures remain astonishing. They confirm without question that the big banks and semi-states call the tune at Ibec. The cannon fodder are the monkeys - real businesses.

Top of the paymasters come the three biggest banks - AIB, Bank of Ireland and Ulster. All pay an identical amount. Each forks out an uncannily similar €180,000 a year to keep the club under its influence.

Ibec pretends that the annual sub is worked out on the basis of the number of employees. Funny that. AIB employs 23,000 people (10,000 in the Republic of Ireland), BoI has 16,000 (8,000 in the Republic) and Ulster a mere 5,400.

So how come they all pay the same fee? Well, er, cartels always share the burden in a comradely way.

And they keep the club afloat.

The banks are well-supported by the other pillar of social partnership, the semi-states.

Semi-states pony up without question. It is, after all, taxpayers' money. So it doesn't matter.

The great monopolies head the semi-state posse. An Post, the most troubled of the invalids, pays the most, with an annual levy of €123,000.

The DAA (which, totally coincidentally, is chaired by Gary McGann, the last Ibec president) is joint runner-up, with a phenomenally generous €120,000 - a sum equalled only by another state monopoly - the ESB - whose shareholder (the State) also coughs up €120,000.

RTE gives the boys €90,000. Bord na Mona stumps up €75,000. An Bord Gais coughs up €63,000 and Coillte sheds €60,000. Every one an offspring of a monopoly.

Source: http://www.independent.ie/business/the-ibec-monkeys-turn-tail-133656.html

I can't help but speculate that the banks and the semi-states, both sectors that have Ireland comfortably stitched up into cosy cartels, might have reasons for objecting to something that makes cross-border business (and thus competition) easier that have little to do with the good of the country as such.

cordially,
Scofflaw

sarumite

Fratton Fred wrote: »

The vat reduction wasn't designed so that Sainsburys could earn a few quid though. The Irish tax rate is designed to attract people here from other European countries.

Possibly true...though the net effect was a de-facto "tax haven" for VAT reciepts. Purely in terms of principle, In don't think it would be right for the Irish government to say to britain "hey, your tax rate is harming our economy, bring it up". Simple fact is Ireland is free to drop it VAT rate to 15% (or below) if it so chooses....as is Britian with regards its CT rate.

Dannyboy83

sarumite wrote: »

When Britian dropped their VAT to 15% which caused a flood of Irish shoppers up north boosting the British Economy, I don't think it would be Ireland business to dicate their tax policy....I have the same opinion on this one.

Besides, NI is in the process of dropping their CTR to match ours.

Are we going to be allowed to dictate terms to them I wonder?

ei.sdraob

Scofflaw wrote: »

It gives no such weight, and that's frankly a daft argument, which as far as I can see is brought about by an inability to understand that there is another view on taxation.

I'll try again:

1. most countries of "Old Europe" have high tax/high public spending economies.

2. they have these because they believe that high public spending is a good thing, and requires high taxation to pay for it

3. they look at our high public spending, and they don't see a bad thing

4. they look at our low taxation, and they see a way in which we are not bringing in as much tax money as we could

5. then they look at the fact that they're lending us money to keep public spending high

6. and they wonder why we don't raise our taxes in order to be able to afford it, rather than borrowing the money form them

Really, it's not complicated - there is another viewpoint. They're not trying to "punish" us by suggesting we raise our taxes - it's what they would do, and they believe it would help close the gap in our finances they're currently funding.

cordially,
Scofflaw

Your argument for wanting concessions on taxation boils down to this

"we are giving you something and we want something back in return on top of the interest"

when the noises from EU should be along these lines

"how do we fix this problem and prevent it from happening again and affecting all of us"


The EU is not even attempting to help Ireland, but punish us at a time when we need all that solidarity that was promised.

Scofflaw

Dannyboy83 wrote: »

So, what it actually boils down to is that........... we throw a spanner into their working model by being low tax.
So they are smashing off the bits around our rectangular shape, in order to fit us through their circular hole.

They have to smash our model in order to make their model function properly.
Doesn't sound like their model is that superior after all.

Sure, because we have a miracle low-tax high-spend economy...oh, wait...sorry, had a "miracle" low-tax high-spend economy that turned out to be built on unsustainable debt. Oh, so did Iceland. Big wins there for 'our' model...

Dannyboy83 wrote: »

Hong Kong subscribes to the Anglo-Saxon model far more strictly than Ireland or the UK.
Hong Kong seems to be doing well.

Hong Kong doesn't aspire to the high public spending bit.

Dannyboy83 wrote: »

Following the model hasn't been the problem for Ireland.
Not following it has. i.e. socialising all those losses.

Eh, every other Anglo-Saxon country has socialised their bank losses.

Dannyboy83 wrote: »

Besides, many of the countries which subscribe more strongly to the Socialist model are also in serious trouble.

Can't see the relevance there - high-tax high-spend isn't a "socialist model" unless you're an American. It's the European social democratic model, which is a rather different beast, because it's a mixed-economy system.

How many of the social democratic economies have had IMF bailouts so far?

Dannyboy83 wrote: »

So again, it comes back to the countries which are doing ok being the ones which have the natural advantages, and always had them.
And the ones who are doing poorly (not ignoring our own mismanagement) are the countries which don't have the natural advantages. The Peripheral countries, which is the very reason we ever needed a low CTR to begin with.

Most Europeans live on the continent, not an island - live in countries with mammoth indigenous industries e.g. Siemens, which established themselves during the 19th century.
Most Europeans don't live on a peripheral island off the coast of Europe which has feck all in the way of industry, and feck all in the way of reason to attract industry.

Their model works fine for where they are.
Clearly, it is not working where we are.

We aren't trying their model, though.

cordially,
Scofflaw

ei.sdraob

Scofflaw wrote: »

Eh, every other Anglo-Saxon country has socialised their bank losses.

Show me one which has even approached the magnitude of our "socialization" per head of population.

Fratton Fred

sarumite wrote: »

Possibly true...though the net effect was a de-facto "tax haven" for VAT reciepts. Purely in terms of principle, In don't think it would be right for the Irish government to say to britain "hey, your tax rate is harming our economy, bring it up". Simple fact is Ireland is free to drop it VAT rate to 15% (or below) if it so chooses....as is Britian with regards its CT rate.

Britain, like Germany and France can't drop its CT rate. If they did, they wouldn't be able to pay their bills. That is the whole point. Ireland was living off the back of revenue from a property bubble. That bubble is gone so it now has a massive deficit. Currently Ireland is doing nothing to address that and is having to borrow.

The rest of the EU are simply saying that the Irish government are ignoring the elephant in the room which is the CT rate and (probably more significantly) the associated loopholes.

Dannyboy83

Scofflaw wrote: »

Hong Kong doesn't aspire to the high public spending bit.

We aren't trying their model, though.

Agreed.
So, in order to have a high spend economy, we need to have a high tax economy.

But we cannot have a high tax economy. We're a peripheral island.
Ergo, we cannot have a high spend economy.

So why don't the Europeans get to the root of the problem?
Insist we become low spend, not high tax.


I understand the point you are making that Europeans do not see high tax/high spend as a problem.
And we all agree what low tax/high spend is a problem.
But surely the Europeans must accept that High Tax/High spend IS a problem in a country which cannot sustain High Tax?

I cannot understand why they are sticking their heads in the sand.

Do Europeans really believe that high tax is going to work here?
And if so, why didn't it work when DevilEra was in power?

ei.sdraob

Fratton Fred wrote: »

Britain, like Germany and France can't drop its CT rate. If they did, they wouldn't be able to pay their bills. That is the whole point. Ireland was living off the back of revenue from a property bubble. That bubble is gone so it now has a massive deficit. Currently Ireland is doing nothing to address that and is having to borrow.

The rest of the EU are simply saying that the Irish government are ignoring the elephant in the room which is the CT rate and (probably more significantly) the associated loopholes.

You still dont get it
Without the banks our debt would be about 80% gdp and manageable with required cuts being achieved as promised.
With the banks "our" debt (notice the commas) is much larger.

The EU need to understand the difference between debt being run up by the banks and by the public expenditure/welfare.

The Irish people voted for parties which will reduce the public expenditure/welfare side, but the banks still remain a mess.
And neither do I remember having a vote on whether we need to socialize bank losses.
So to blame and punish the Irish people is incredibly shortsighted.

Fratton Fred wrote: »

that the Irish government are ignoring the elephant in the room which is the CT rate

The elephant in the room is the banking debts

Boskowski

ei.sdraob wrote: »

It has alot to do with this and Ireland.


The arguments on this forum go like this:
* Irish people voted FF
* FF mismanaged the country with some Irish people going along for ride, initially giving an appearance of "good times"
* FF during a crash which they helped build dumped the banks onto the Irish people
* Irish people == Irish state == Irish banks
hence its the fault of Irish people, who now how to cleanup the mess and pay a high interest loan as punishment


Now lets compare it to this:
* German people voted into the Nazis
* Who helped the economy along, with more German people joining/supporting them them
* The Nazis then went on rampage
* German people == Nazi party == bad
hence WW2 was the fault of German people who now get a Marshall Plan in the West part instead of reparations



The average Irish person is not responsible for this mess anymore than the average German was responsible by atrocities carried out in WW2, yes "some" people got involved but not everyone.

So to make "all" Irish people pay for the mistakes of a few is punishment.

But may I remind you that Germany has actually paid a lot of reparations, didn't have a sovereign state for over forty years after WW2 and benefited mostly from the fact that the cold war was already on the table by the time WW2 came to an end. We didn't get all that help out of sheer goodness. We got the help because we were needed as a forefront against the Soviet Union and because it would have been unwise to create a peasant nation as big as Germany in the heart of Europe. They all knew that the punitive approach was tried before (Versailles treaty) and how that worked out.

In any case...
The case you're making I can follow. What I can't follow is why the German taxpayer should pick up the bill. According to your own logic she surely is even less responsible than the Irish taxpayer.

Scofflaw

ei.sdraob wrote: »

Your argument for wanting concessions on taxation boils down to this

"we are giving you something and we want something back in return on top of the interest"

when the noises from EU should be along these lines

"how do we fix this problem and prevent it from happening again and affecting all of us"


The EU is not even attempting to help Ireland, but punish us at a time when we need all that solidarity that was promised.

The European countries contributing to our bailout are lending us money below market rates - and are therefore absorbing all the default risk above their margin. If you take - as I know you do - Gurdgiev's calculations of our default risk on 20% of the debt as being c.90%, you can also calculate how much of a risk the EFSF are taking on by lending below the market rate. The answer is that treating the EFSF lending rate as the non-defaulting baseline, the risk they're taking of a 20% default is 71.9%. That's a high risk. On 50% default, the risk is still nearly 50:50, at 45.47%.

What we're asking for is that they take on more default risk - 81% of a 20% default and 54.5% of a 50% default by dropping the rate 1%, 87.4% of a 20% default and 62.1% of 50% default by dropping the rate 2%.

In exchange, they've asked, not for a reduction in our CT rate - let me reverse your challenge of earlier, and ask you to show where a rate increase has actually been formally asked for, and how much it was - but for movement on CCCTB. And not much movement, either - merely a commitment to “constructive engagement on tax co-ordination”.

cordially,
Scofflaw

Scofflaw

ei.sdraob wrote: »

Show me one which has even approached the magnitude of our "socialization" per head of population.

Show me the relevance of that remark. If someone says that socialising bank losses isn't part of the Anglo-Saxon model, then the fact that every Anglo-Saxon-model economy does socialise bank losses obviously contradicts that claims. The magnitude is entirely irrelevant, except where it would be so large that the country can clearly see it cannot afford to do so.

Having said that, the UK's bank bailout is both mostly concealed and may be yet to fully play out to the same degree as ours:

The report, entitled Where did our money go?, found banks currently borrow £12bn a month, which will rise to £25bn a month next year as government-backed funding ends, the NEF said on Monday.

This vast "funding cliff" could force them to ask the state for aid, it warned.

The London-based think tank also lamented a “shocking” lack of information on the expenditure of £1.2 trillion already spent by the public sector on bank bail-outs.

Mm..."funding cliff" at the end of state funding...that's surprisingly reminiscent of the "wall of debt" last September as the Irish Guarantee ended.

cordially,
Scofflaw

ei.sdraob

@Scofflaw come on now, aghghghghhhhghh!

If the EU doesn't help us then they loose too, Ireland does not exist in a bubble.
It is not about helping Ireland, it is about helping the EU.
The mutual interest over self interest.

---

@Boskowski

The point being made and confirmed by you is that Germany was helped because not helping it would have caused bigger issues down the road for all. They did not want to repeat the mistakes of WW1 and Germany which led directly to WW2

Which ties directly to my response to Scofflaw above, the aim of the EU should be to help us help them, their current policy is a form of punishment and they only need to look at their own history to see that this is a bad approach.

ei.sdraob

Scofflaw wrote: »

Show me the relevance of that remark.
...
The magnitude is entirely irrelevant

The magnitude between chopping off a finger and chopping of an arm is highly relevant if its your limb being chopped off.

Scofflaw

ei.sdraob wrote: »

@Scofflaw come on now, aghghghghhhhghh!

If the EU doesn't help us then they loose too, Ireland does not exist in a bubble.
It is not about helping Ireland, it is about helping the EU.
The mutual interest over self interest.

Which ties directly to my response to Scofflaw above, the aim of the EU should be to help us help them, their current policy is a form of punishment and they only need to look at their own history to see that this is a bad approach.

Crikey, you're really not getting this, are you? It isn't some kind of punishment. By their lights - and they may be wrong, but they don't think so - raising the rate of corporation tax would generate more corporation tax revenue. It's therefore an avenue of revenue-raising that - by their lights, again - we're not exploring.

Ireland's counter-argument is that raising CT rates would not result in higher CT revenue, but lower - but that. is. just. Ireland's. argument. The rest of Europe is prepared to respect the fact that Ireland believes it, but does not have to agree that it is true.

Seriously, think it through logically. If other European countries believed that they would raise more tax by lowering their CT rates, they would lower their CT rates, because the aim of high taxes is not punitive, but to raise more revenue.

And still we have to cross the gaping chasm of nobody having actually requested that Ireland raise its CT rate. Still what's under discussion here is Ireland dropping its dogmatic opposition to CCCTB.

cordially,
Scofflaw

Scofflaw

ei.sdraob wrote: »

The magnitude between chopping off a finger and chopping of an arm is highly relevant if its your limb being chopped off.

And highly irrelevant here, because we're not. We're talking about whether, as a matter of principle, Anglo-Saxon economies socialise bank losses - and the very clear answer is yes.

cordially,
Scofflaw

Fratton Fred

ei.sdraob wrote: »

@Scofflaw come on now, aghghghghhhhghh!

If the EU doesn't help us then they loose too, Ireland does not exist in a bubble.
It is not about helping Ireland, it is about helping the EU

Thanks to a mess caused by Ireland.

ardmacha

I think there is scope for Kenny et al to take the high ground by cooperating with mechanisms to reduce artificial tax avoidance (e.g. Google's double Irish) and by cooperating to some extent with measures to prevent a brass plate office moving the tax residence of an entire corporation. What we want in Ireland is not just the tax of those companies but some real economic activity i.e. jobs.

But on the bigger issue, for a State with high unemployment, significant emigration and enormous debt to remove a means of attracting economic activity here, i.e. the tax rate, would be stupidity of the highest order. We cannot have sucked a significant amount of economic activity from other EU jurisdictions as we have few jobs and the government finances are in rag order.

ei.sdraob

ardmacha wrote: »

What we want in Ireland is not just the tax of those companies but some real economic activity i.e. jobs.

What you will endup with is and Ireland with no companies and no economic activity. Without tax competition the EU becomes a bland picture where companies gravitate to the German center away from Irish periphery.

Thanks to a mess caused by Ireland.

Ireland did not cause this mess,

the banks, regulator, developers and politicians have led us here.

I dont see the EU doing anything to address the real causes of this crisis.

Fratton Fred

ei.sdraob wrote: »

Ireland did not cause this mess,

the banks, regulator, developers and politicians have led us here.

I dont see the EU doing anything to address the real causes of this crisis.

Irish banks, Irish regulator, Irish developers and Irish politicians.

Sorry, but that's the facts.

Anyone looking from the outside in is going to take one look at the situation and ask what exactly is Ireland doing to correct this and EI far the answer is nothing.

No charges, no court cases, no major cut backs on spending, in short, nothing that is going to cause any form of hardship. Instead, everyone is conveniently blaming the Germans and insisting they should cough up.

Sorry, it doesn't work that way.

ei.sdraob

Fratton Fred wrote: »

Irish banks, Irish regulator, Irish developers and Irish politicians.

Sorry, but that's the facts.

The fact is its the Irish people who have to pay for the actions of the above.
While the EU is doing nothing to address the real causes of this crisis and is instead gone on a tangent.

To say "Ireland did" is incorrect and clumps us all together,
bad enough all the debt was clumped together leading to the sovereign crisis now.

Scofflaw

ei.sdraob wrote: »

The fact is its the Irish people who have to pay for the actions of the above.
While the EU is doing nothing to address the real causes of this crisis and is instead gone on a tangent.

To say "Ireland did" is incorrect and clumps us all together,
bad enough all the debt was clumped together leading to the sovereign crisis now.

The EU has started the (often slow) process of putting together various proposals for reform of areas related to the crisis - our crisis amongst others.

Our failures, however, are addressable by Ireland - and the majority of European countries would probably prefer to keep things that way. Why should they give up more fiscal autonomy because we have used it badly?

cordially,
Scofflaw

ei.sdraob

The banking situation is not "our" failure.

Once again concentrating on corporation taxation does nothing to address this failure of "ours".

Clumping the banks, the state and the taxpayers together as one is wrong on so many levels and is the reason we are here.

EoghanConway

Come on lads, ye've been at this for almost 6 hours. How about giving it a break?

Scofflaw

ei.sdraob wrote: »

The banking situation is not "our" failure.

Once again concentrating on corporation taxation does nothing to address this failure of "ours".

Clumping the banks, the state and the taxpayers together as one is wrong on so many levels and is the reason we are here.

That's really not right. Whatever about whether the taxpayer should be on the hook for the banks, the Irish banks really are an Irish failure. That is something we shouldn't be disclaiming.

cordially,
Scofflaw