ICT and unions in corporate tax battle

THE technology sector and the unions are on a collision course as they battle to influence Finance Minister Brian Cowen on corporate tax rates.

Just days after the Irish Congress of Trade Unions told Mr Cowen that our low rate of corporation tax is unsustainable, ICT Ireland urged him to keep corporation tax at 12½%.

ICT Ireland, the industry body representing the information and communications technology (ICT) sector, in its pre-Budget submission asked the Government to remain committed to retaining our existing corporate tax regime and resist any pressure towards EU tax harmonisation.

ICT Ireland taxation committee chairman Peter McManamon said: “any change in stated Government policy to retain a 12.5% corporate tax rate would be detrimental to our chances to retain and attract foreign direct investment.”

Mr McManamon said that of the 91,000 jobs in the ICT sector, 55,000 are with foreign companies operating here. “Low corporate tax rates have been vital in creating employment. Over the past few years as the marginal corporate tax rate has been reducing, the tax-take has increased from €2.16 billion in 1997 to €5.16 billion in 2003.”

Mr McManamon believes the most important factor in Ireland’s success in attracting 25% of all US investment in Europe over the past 10 years has been the corporate tax regime.

“This is frequently cited by foreign owned companies as the primary reason for which Ireland was chosen as a location over other potential countries,” he said.

ICT Ireland’s wish list also includes innovative tax incentives to encourage the uptake of computers in the home

ICT Ireland says that PC penetration into homes is 42.3%, compared to 54% in Sweden and 82% in the US.

Mr McManamon said that a recent innovative Swedish tax incentive scheme was introduced to encourage an increase of computers in the home.

The ICT also stressed that any further changes in the PRSI system that would impact negatively on payroll costs would be extremely damaging.