State urged to keep ‘attractive taxation regime’

IT’S imperative that Ireland keep its 12.5% Corporation Profit Tax as the basis for ongoing economic development.

That’s one of the key findings of the Enterprise Strategy Group report.

The report presented by the group chaired by Eoin O’Driscoll to the Government yesterday highlights several key areas that need development. To sustain our competitive advantage in an increasingly knowledge-based economy, it stresses the fundamental importance of keeping our tax rate at 12.5%.

Mr O’Driscoll said at the launch of the review that the present level was the “optimum” required to ensure the sustained growth and development of the economy in all its guises up to 2015.

It was imperative that we maintain an “attractive taxation regime” said the report. “An ongoing commitment to our competitive tax regime, promoting enterprise and driving business growth” was basic to maintaining our competitive advantage.

Concerns have been raised about our ability to maintain the tax rate, as countries like Germany and France press for a uniform rate which, if introduced, would seriously erode one of the trump cards in terms of attracting foreign direct investment to Ireland. On the home front, the recommendations are based on the assessment that indigenous business is not close enough to its markets. “In our view, enterprise in Ireland is not close enough to its customers: in the main, we produce products or services designed elsewhere, and sold by and to other people in other countries.”

To sustain the growth of the past decade, Ireland will have to improve its sales and marketing as well as its research and development capabilities. Mr O’Driscoll said we spend about half what the rest of our European competitors do in this key area.

The recommendation that Export Ireland and a Technology Ireland be set within Enterprise Ireland suggests a much stronger focus in the years ahead to ensure the Irish-owned segment of the economy delivers much better value.

It is a recognition that firms have to be brought much more into the future strategic growth of the economy in the years ahead.