ANY concession on the corporation tax regime will damage confidence and create uncertainty at a time when foreign direct investment is pouring into the country, warns IBEC head Danny McCoy.
His warning comes at a time when the Government is desperately searching for something that will mollify French and German demands to raise the 12.5% corporate tax rate.
At the prestigious European Business Summit in Brussels, Mr McCoy told the Irish story using the theme of the two-day meeting, Europe — leading or lagging, to say that the globe’s biggest exporter must fight to defend its position. And Ireland is part of that fight.
Mr McCoy described as “gratuitous” the idea that the €67 billion loan is a gift and warned that any change to the corporation tax rate would damage the kind of growth the country needs to get out of its disastrous state.
But emerge it will, the IBEC boss assured the large audience at the conference, providing facts and figures to show that the process is already under way. The balance of payments is in surplus, Foreign Direct Investment (FDI) is at record levels with a new announcement every week and we are becoming more competitive.
“Germany and Ireland have the same model — make our economies competitive and export our way to growth. The fundamental difference is that they are an engineer for growth for Europe and lots of their neighbours see them operating a ‘beggar thy neighbour’ system in trade. Ireland is so small it does not cause anybody any damage other than psychological.”
Mr McCoy said: “France believes that Germany has pursued an act of devaluation within the eurozone to their competitive advantage,” bringing the battle to the heart of the common currency territory.
Germany, during the years Ireland’s economy was floating on the construction boom, drove down their wage costs, increased production and are now spending the money they realised from exports and not domestic growth.
Germany was the world’s number one exporter but Ireland exports more pro rata, says the former ESRI senior researcher who took over the helm at IBEC almost two years ago.
“Ireland does not need to default — it needs growth and if those that lent want to get their money back they have to encourage growth,” he said.
“People are surprised Ireland is alive and it’s hugely important to tell the story. People are focusing on the Government and are missing out on the adjustment in the private sector and the results.” Mr McCoy added.
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