We need to keep up the good fight on taxes

The world remains in economic turmoil with no sign of light at the end of the tunnel.

Millions around the world are unemployed and the policies of austerity continue to make matters worse. It should come as no surprise that countries should be trying to find ways of generating more income to make ends meet.

Corporation tax has been a bug bear for a long time for many countries. Looking at ways to garner more funds from that source stands to reason. However, it presents huge challenges.

Our economy has grown on the backs of the hundreds of multinationals we have managed to attract to these shores. These multinationals have not only created employment for thousands but have helped to grow our economy, paying millions in taxes every year.

The vast bulk of these companies have come from the US.

They have established European operations in Ireland not because they like us, but because they can make more money here than elsewhere. They do that through our low corporation taxes.

Our politicians, and those of very many other countries, understand that. Maybe we understand it a little bit better than most and hence our success with FDI attraction. However, most countries, if they wish to attract FDI must and do have policies that are attractive to such companies. Tax reduction is the bottom line.

In essence, attracting such companies to Ireland means jobs for Ireland but reduced tax take somewhere else. Of course, it’s not all one way. While very many US companies have come to Ireland, Irish companies such as CRH and the Kerry Group have established sizeable operations in the US.

While the numbers coming our way are much higher, the US economy is hundreds of times our economy.

Mainland European countries have a considerable advantage on us. The larger countries have a critical mass of people with direct access to hundreds of millions of others. In other words, the market is on their doorstep.

We on the other hand are a small peripheral country with some of the most costly regional access shipping routes in the world. We do not have a critical mass of people that would act as a magnet. Low taxation is a main differentiating factor, coupled with what is still a flexible regulatory environment.

When everyone is busy and taxation comes easy there is minimal focus on what is perceived by some as unfair taxation policies. This is not evasion as had been suggested by politicians in the US and the UK. Tax evasion is illegal. It is tax avoidance, which is legal.

The British are once again jumping up and down about Ireland’s tax regime. The French and Germans have been doing it for some time. The Americans have now started firing salvoes in all directions.

What should not be forgotten about Irish taxation policies is that the laws that allowed for the creation of such policies were passed by politicians. We should not forget either that these policies have been approved by Europe. It’s not as if we tried to slide something by without them seeing it.

Companies should indeed pay their “fair share” of tax but as we well know “one man’s meat is another man’s poison”. So what is fair? For instance does TD Richard Boyd Barrett think it’s fair that we should forego the 4,000 jobs created by Apple in Ireland and the millions Apple pays in tax and that its employees pay, as well as the thousands of other jobs created in the wider economy?

That we should be under fire from both Europe and the US is unfortunate. It would appear that we are on a war footing in an effort to protect our main means of attracting vital jobs from attack from both outside and from within.

It is a good fight and we need to keep on top of it.