Corp Tax to increase.

Tora Bora · 01-10-2010 12:42PM #1

Does this indicate that behind the scenes, our soverign government has ceeded tax control to the EU, in return for access to the stability fund.

http://www.irishtimes.com/newspaper/breaking/2010/1001/breaking23.html

IRISH TIMES REPORTERS
Ireland will stop being a low tax economy in the future, EU commissioner for economic and monetary Affairs, Olli Rehn said today.
Speaking to reporters in Brussels today where he was attending a meeting of EU finance ministers, Mr Rehn foretold an end to the country's status as a low tax base.
His comments come following yesterday's announcement from the Central Bank on the cost of the bank bailout plan, after which Taoiseach Brian Cowen and Minister for Finance Brian Lenihan signalled tougher austerity measures in the forthcoming Budget.
Asked if he believed Ireland's rate of corporation tax should be included in moves to increase tax revenues, Mr Rehn said: "I do not want to take any precise stand on an issue which is a matter for the Irish Government and the Irish parliament to decide."
He added: "I would not rule out any option at this stage since we know that Ireland is not going to be in the coming decade, it's a fact of life, Ireland will not continue as a low tax country. But it will rather become normal tax country in the European context."

Scofflaw · 01-10-2010 01:37PM

Tora Bora wrote: »

Does this indicate that behind the scenes, our soverign government has ceeded tax control to the EU, in return for access to the stability fund.

http://www.irishtimes.com/newspaper/breaking/2010/1001/breaking23.html

IRISH TIMES REPORTERS
Ireland will stop being a low tax economy in the future, EU commissioner for economic and monetary Affairs, Olli Rehn said today.
Speaking to reporters in Brussels today where he was attending a meeting of EU finance ministers, Mr Rehn foretold an end to the country's status as a low tax base.
His comments come following yesterday's announcement from the Central Bank on the cost of the bank bailout plan, after which Taoiseach Brian Cowen and Minister for Finance Brian Lenihan signalled tougher austerity measures in the forthcoming Budget.
Asked if he believed Ireland's rate of corporation tax should be included in moves to increase tax revenues, Mr Rehn said: "I do not want to take any precise stand on an issue which is a matter for the Irish Government and the Irish parliament to decide."
He added: "I would not rule out any option at this stage since we know that Ireland is not going to be in the coming decade, it's a fact of life, Ireland will not continue as a low tax country. But it will rather become normal tax country in the European context."

I suspect it represents nothing more than an observation on probability. Government outgoings exceed government income - ergo, something has to change.

cordially,
Scofflaw

MrDarcy · 01-10-2010 02:20PM

I seriously hope it is put up, there is no reason why it should be protected while everyone else is taking a serious hit. I know everyone is going to come back with, "oh what about our multinationals, oh what about Microsoft, Dell, Intel"...

Well they knew when they came here that taxes can go up as well as down, the country is bigger than the few US multinationals who use basically this country as a corporate tax shelter for the purposes of transmitting profits out of the country. As much as we need to stand up to public sector vested interests, we need to stand up as much to the vested interests in the private sector as well.

Every entity needs to put their shoulder to the wheel now, US multinationals included.

Tipp Man · 01-10-2010 02:25PM

MrDarcy wrote: »

I seriously hope it is put up, there is no reason why it should be protected while everyone else is taking a serious hit. I know everyone is going to come back with, "oh what about our multinationals, oh what about Microsoft, Dell, Intel"...

Well they knew when they came here that taxes can go up as well as down, the country is bigger than the few US multinationals who use basically this country as a corporate tax shelter for the purposes of transmitting profits out of the country. As much as we need to stand up to public sector vested interests, we need to stand up as much to the vested interests in the private sector as well.

Every entity needs to put their shoulder to the wheel now, US multinationals included.

If Corp tax rates went to 25% or more than there would be very few US multinationals left in this country to "put their shoulder to the wheel"

If this happens then more half a million unemployed will be the norm. For a foreign company this country has very little going for it apart from the low tax

RealityCheck · 01-10-2010 02:33PM

MrDarcy wrote: »

I seriously hope it is put up, there is no reason why it should be protected while everyone else is taking a serious hit. I know everyone is going to come back with, "oh what about our multinationals, oh what about Microsoft, Dell, Intel"...

Well they knew when they came here that taxes can go up as well as down, the country is bigger than the few US multinationals who use basically this country as a corporate tax shelter for the purposes of transmitting profits out of the country. As much as we need to stand up to public sector vested interests, we need to stand up as much to the vested interests in the private sector as well.

Every entity needs to put their shoulder to the wheel now, US multinationals included.

The problem with that way of thinking is that we rely on the multinationals, whereas the multinationals don't rely on Ireland. Its the reality of life. These corporations won't stay because we destroyed our company with a destructive property bubble and need to totally realign our taxes. Why would they? there sole purpose in being here at the minute is to maximise profits. If we had other things going for us such as a low cost base, good broadband etc well then maybe we would have some scope for raising it. Sadly we don't.

I agree with Scofflaw, I dont think the EU can even touch our Corporation Tax rate, although they could make life difficult for us to keep it, especially should we require bailing out.

George Orwell 1982 · 01-10-2010 02:51PM

We probably could increase corporation tax to 15% and still keep the bulk of our MNC investment. Increases much more than that would be damaging.

Its not gauranteed that corporation tax will increase, but it is definite that income taxes will increase substantially.

KerranJast · 01-10-2010 02:53PM

Dear Olli Rehn,

PFO.

Regards,
Ireland.

PS If you force us to hike our CTR kiss we'll be coming for a bailout. XXX.

Scofflaw · 01-10-2010 03:09PM

KerranJast wrote: »

Dear Olli Rehn,

PFO.

Regards,
Ireland.

Now where did I see an attitude like that before...hmm...oh, yes, back when Charlie McCreevy was writing the budgets that got us to where we are. It worked so well then, too.

KerranJast wrote: »

PS If you force us to hike our CTR kiss we'll be coming for a bailout. XXX.

They can't force us to hike our CT rate, but we will probably be looking for a bailout anyway.

regards,
Scofflaw

SkepticOne · 01-10-2010 03:11PM

I don't think these remarks by Rehn are part of a behind-the-scenes attack on Ireland's corporation tax. It seems to be more likely about the general level of taxation.

Ireland's corporation tax probably will come under scrutiny when Ireland applies for the ECB/IMF bailout fund and I think this is why you are getting posturings from various MEPs in advance of this however I don't think the remarks by Rehn are part of this.

Amhran Nua · 01-10-2010 03:25PM

I think Ireland would rather leave the eurozone than raise corporate taxes. One or the other would have a similar effect, but if you're going to lose the multinationals due to European interference anyway you might as well kick a big hole in European political solidarity while you're at it.

unit 1 · 01-10-2010 03:34PM

Tipp Man wrote: »

If Corp tax rates went to 25% or more than there would be very few US multinationals left in this country to "put their shoulder to the wheel"

If this happens then more half a million unemployed will be the norm. For a foreign company this country has very little going for it apart from the low tax

How many multinationals would leave if corp tax was raised to say 13% or 14% and on and on. The point is that even the multinationals should pay a little, it would help a lot.

Scofflaw · 01-10-2010 03:45PM

SkepticOne wrote: »

I don't think these remarks by Rehn are part of a behind-the-scenes attack on Ireland's corporation tax. It seems to be more likely about the general level of taxation.

Ireland's corporation tax probably will come under scrutiny when Ireland applies for the ECB/IMF bailout fund and I think this is why you are getting posturings from various MEPs in advance of this however I don't think the remarks by Rehn are part of this.

I suspect the posturings from the MEPs are for domestic consumption, given they're both German - the only reason they seem to have been picked up here is that they provided an opportunity for a dig at Fine Gael.

cordially,
Scofflaw

thebman · 01-10-2010 04:31PM

Amhran Nua wrote: »

I think Ireland would rather leave the eurozone than raise corporate taxes. One or the other would have a similar effect, but if you're going to lose the multinationals due to European interference anyway you might as well kick a big hole in European political solidarity while you're at it.

I hope this isn't Amhran Nua's official stance on the issue :-/

unit 1 wrote: »

How many multinationals would leave if corp tax was raised to say 13% or 14% and on and on. The point is that even the multinationals should pay a little, it would help a lot.

Our first move to increase it will shake MNC as we it will be seen as not reliable as we could increase it at anytime and are willing to.

The fact that we haven't so far stands to us in attracting new investment and makes companies more likely to stay here for future despite higher costs of doing business in other areas.

If we end up raising our corporation tax level, I would really fear for the future of the country over the next 10 years or so. We have almost no domestic economy and need to build one before raising corporation tax levels for foreign multi-nationals or we will have no economy whatsoever and it will be a lot harder to recover if we end up at that point.

Amhran Nua · 01-10-2010 04:36PM

thebman wrote: »

I hope this isn't Amhran Nua's official stance on the issue :-/

Ponderings on possible outcomes. Not getting loans might hurt us for a while, being forced to push up the CT rate will turn us into the semi permanent three legged dog of Europe. On the whole I'd rather be a persistent irritation to the mandarins in Brussels.

ashleey · 01-10-2010 04:50PM

Note that Cowan waffled around the subject (not unusual I agree) when pressed on the issue. Who is going to take bets that Corporation Tax isn't increased within this 4 year plan?

snubbleste · 01-10-2010 04:58PM

Where are all those people who insisted a year ago (Lisbon) that we had full national control with a 'veto' and 'cast-iron guarantees' and 'opt-outs' in relation to EU tax harmonisation and corporation tax?

ashleey · 01-10-2010 05:00PM

Taoiseach Brian Cowen said the budgetary framework, which will be published at the start of November, would set out a credible pathway.

The European Commission and the European Central Bank will keep in close and regular contact with the Government over that plan.

Says it all really.

MrDarcy · 01-10-2010 05:06PM

The worst thing we can do here is continue to let the US multinational tail wag the Irish sovereign dog. Raising CT to 15%, is making a bold statement that everyone must contribute, while also keeping in place an attractive CT rate.

I don't buy this whole boogeyman story that they wil all up ship and disappear overnight if we increase CT, this is obviously what they want us to believe. We have already learnt the very hard lesson through the property bubble of what happens an economy that has all it's eggs in pretty much the same basket.

That's the situation we are in here with the multinationals, we are out on a hook here again, and in a situation whereby if one or two large employers threatened to pull out, we'd be all of the opinion that we'd be up sh*t creak without a paddle.

Yet again, a short sighted policy on employment has left us exposed.

Tipp Man · 01-10-2010 05:25PM

unit 1 wrote: »

How many multinationals would leave if corp tax was raised to say 13% or 14% and on and on. The point is that even the multinationals should pay a little, it would help a lot.

Well the multinationals are paying a little, a few billion annually(all corp tax)

As always we should look at the numbers - according to the department of finance the Corporation Tax take for the 8 months to August is €1.836bn and the annual target for 2010 is €3.16bn.

so 12.5% gives us 3.16bn, raising the rate to 13% gives us 3.28bn, 14% gives us 3.54bn and 15% gives us 3.79bn

IMO the bad press that we would recieve by raising it from 12.5% to 13% or 14% is no worth it as it would send a bad signal to company looking to redomicile or set up in Ireland.

Once you move to 15% then on the face of it an arguement can be made as that could potentially lead to a 0.6bn increase in revenues. Personally i think that this should only be a last resort and there are hundreds of things that i would cut before this

Tipp Man · 01-10-2010 05:30PM

MrDarcy wrote: »

The worst thing we can do here is continue to let the US multinational tail wag the Irish sovereign dog. Raising CT to 15%, is making a bold statement that everyone must contribute, while also keeping in place an attractive CT rate.
I don't buy this whole boogeyman story that they wil all up ship and disappear overnight if we increase CT, this is obviously what they want us to believe. We have already learnt the very hard lesson through the property bubble of what happens an economy that has all it's eggs in pretty much the same basket.

That's the situation we are in here with the multinationals, we are out on a hook here again, and in a situation whereby if one or two large employers threatened to pull out, we'd be all of the opinion that we'd be up sh*t creak without a paddle.
Yet again, a short sighted policy on employment has left us exposed.

So given that we are currently up the creek without a paddle but still somewhat dependant on multinationals to keep a few hundred thousand people in jobs, do you think it is wise to atogonise them and give them another reason to pull out. After all our wages are too high and we have some of the highest energy costs in Europe.

If we raise corp tax just how exactly are the IDA or whoever supposed to sell this country to foreing companies? Without low Corp Tax what exactly do we have going for us?

Note i am not saying it is right that we are dependant on multinationals for employment but the fact remains they do employ a lot of people (don't forget indirectly also)

ei.sdraob · 01-10-2010 05:32PM

raising corpo tax would be the most retarded of moves that could be taken

the negative medium to long term consequence are not worth the few million this would raise

anyways we no longer are the smallest corpo rate in EU

as for companies moving, i am already exploring ways of splitting own company and sending part of it offshore or just closing up shop altogether, any more taxes will speed up my research/departure, im not ****ing anymore paying for mistakes of a government i dont support (or voted for) and/or people (from bankers to mortgage holders) who dragged this country into **** by getting into too much debt, have your own pie and eat it

Tipp Man · 01-10-2010 05:42PM

ei.sdraob wrote: »

raising corpo tax would be the most retarded of moves that could be taken

the negative medium to long term consequence are not worth the few million this would raise

anyways we no longer are the smallest corpo rate in EU

as for companies moving, i am already exploring ways of splitting own company and sending part of it offshore or just closing up shop altogether, any more taxes will speed up my research/departure, im not ****ing anymore paying for mistakes of a government i dont support (or voted for) and/or people (from bankers to mortgage holders) who dragged this country into **** by getting into too much debt, have your own pie and eat it

Some people are hell bent on taking the "rich" or companies and see that as the only means to getting us out of this mess. And what we can't get from the rich or companies we'll just borrow for

How this country can continue to have the highest level of public sector wages and social welfare in the world is absolutley beyond me. Its pure madness

Scofflaw · 01-10-2010 05:58PM

snubbleste wrote: »

Where are all those people who insisted a year ago (Lisbon) that we had full national control with a 'veto' and 'cast-iron guarantees' and 'opt-outs' in relation to EU tax harmonisation and corporation tax?

Still here, still pointing out that that's the case. Lisbon changed nothing, and we still have all those vetoes. Nor do we have anything more at this stage than a couple of German MEPs calling personally for Irish tax increases, and an EU Commissioner observing that Ireland probably can't continue as a low tax economy given the current state of its finances.

What we didn't get at Lisbon was a guarantee that nobody would ever comment on our tax rates, which appears to be the problem.

cheerily,
Scofflaw

Corp Tax to increase.

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