Noonan outlines tax hike impact

Finance Minister Michael Noonan has said a 2.5% rise in the corporation tax rate would reduce inward investment by nearly 10%.

In a written Dáil response to Fine Gael’s Brendan Griffin on the issue, he said: “Any increase in the 12.5% rate could unfortunately result in a behavioural change on the part of taxpayers and potentially have a negative impact on economic growth as a result.”

He further stated: “Even a marginal change in the rate of corporation tax would undermine both our long- held stance on this issue and the certainty of business, domestic and international, in our resolve to maintain that position.”

Mr Noonan said it would take only a 2.5% increase in the rate (to 15%) “to decrease Ireland’s inward investment by nearly 10%”.

He added that “the extremely low effective rate figures that are sometimes quoted and attributed to Ireland are based on a flawed premise”.

“The figures are running together the profits earned by group companies in Ireland and in other jurisdictions and incorrectly suggesting that Irish tax does or should apply to both,” the finance minister added.

“Ireland cannot tax profits that are properly attributable to other jurisdictions.

“The ability of some multinationals to lower their worldwide rate of tax using international structures reflects the global context in which Ireland, and indeed all countries, operate.”

Mr Noonan noted that the exchequer collected over €4.2bn in corporate tax from multinationals last year, 11.3% of overall tax revenue; and the equivalent to 2.6% of Gross Domestic Product.