Changes to tax regime ‘could impact our ability to generate wealth’

THIS country must never yield to pressure to give up its attractive tax regime so critical to its economic success.

That was the message of the president of the American Chamber of Commerce in Ireland, Eoin O’Driscoll, yesterday. He defended Ireland’s 12.5% corporation tax rate as a legitimate and powerful tool in driving our economic success.

He condemned recent media reports about transfer pricing by US multinationals saying they could undermine Ireland’s reputation as a preferred location for foreign direct investment.

“Ireland has a strong network of tax treaties with all the major trading partners. Ireland operates a standard rate of corporation tax that applies to all companies (whether domestic or foreign) and to all traded activities in Ireland,” he said

He spoke at the Chamber’s Annual Thanksgiving Lunch in Dublin yesterday.

Finance Minister Brian Cowen, who addressed the lunch, stressed the importance of the 12.5% rate.

“The attainment of the 12.5% rate of corporation tax in Budget 2003 by this Government while still increasing our corporation tax base was a sizeable achievement. This far-sighted decision has yielded over €5.5 billion in revenue, up from €2bn when the rate was 36% in 1997,” he said.

Overall, he said low direct tax rates, both personal and corporate, have been a key factor in generating growth and employment.

“Even in the midst of the recent global economic slowdown, it is to the great credit of the parties in government that they held fast to the policy of attaining and maintaining our target low level of Corporation Tax as a vital incentive to attract new multinational companies,” he said.

“This Government knows the importance of using tax effectively as an economic instrument. I noted at the weekend that the chief executive of Dell, a company that employs 4,500 Irish people, said it would consider reviewing its position in Ireland if our corporation tax increased.

“I can assure all of you here today that is not going to happen on this Government’s watch,” he said.

Mr O’Driscoll said Ireland’s taxation regime has stimulated investment and maximised exchequer revenue: “Any changes could have far reaching consequences and could negatively impact on our ability to generate and sustain wealth in Ireland.”