Speaking at the launch of a new report into the value to the Irish economy of the IFSC (International Financial Services Centre) its president, John Bruton, said that corporation tax is the one area of Ireland’s tax network which is currently ahead of target, in terms of revenue take.
The former taoiseach added that the country’s low level corporate tax policy has been in place for more than half a century (the rate actually being upped to 12.5% when he was in office in the late 1990s) and comfortably pre-dated Ireland’s entry into the EEC/European Union.
Yesterday’s report – carried out by Accenture and Financial Services Ireland (FSI) – showed that IFSC companies contribute €2.1bn in tax every year and represent 36% of the total corporate tax take.
But, while various Government ministers said yesterday that the corporate tax issue “is not up for negotiation” during the IMF/EU talks, one economist, Pat McCloughan of PMCA Economic Consulting, said that it cannot be ignored.
“The intervention by the IMF/EU provides an important opportunity to address many of the underlying competitiveness issues that have persisted in Ireland for far too long. None of our ‘sacred cows’ should be excluded from review – we no longer have this luxury,” he said.
Meanwhile, regarding the ongoing growth potential of the IFSC, Mr Bruton warned against complacency: “A key challenge is to manage the optimal balance between skills, productivity and cost of resources. The IFSC needs to be competitive with other western European centres of similar scale and sophistication – including Luxembourg, and emerging centres in Eastern Europe, the Middle East and Asia.”