Fears over Kerry’s US foreign investment tax plan dismissed

FEARS that a tax imposed on US foreign investment by Democratic presidential nominee John Kerry would damage investment into Ireland have been dismissed.

However a spokesman for the IDA said it would struggle to create another 9,000 jobs this year because investment confidence in the US was still low.

Colm Donlon, spokesman for IDA Ireland, said in the Celtic Tiger period from 1995 to 2000 the economy generated up to 80,000 jobs through Foreign Direct Investment.

It peaked at 23,000 jobs in 2000 creating a 16,000 average job-creation period over the five years from 1996 to 2000, he said.

However, the general average spread over a wider period has been 9,000 but IDA will struggle to make that figure in 2004, he said. Since 2000 the number of jobs generated in each of the last three years has been 13,000, 11,000 and 9,000.

Kerry’s pledged yesterday to tax US corporations who invested abroad, in a drive to generate 10 million jobs over the next few years.

It was feared his proposals could be a huge disincentive to US firms thinking of setting in Ireland.

Kerry’s aim is to give tax breaks to US corporations who invest at home instead of locating cheap labour markets abroad.

He also pledged to scrap the $1.2 trillion personal tax breaks package on the table from US President George W Bush.

Mr Donlon pointed out Ireland no longer offered cheap labour to any potential corporation.

“Instead we offer high skills, good R&D and an innovative environment to firms committed to sustaining their long-term advantage in the market place,” he said.

The problem facing the IDA currently is the lack of confidence in corporate America.

“Jobs are not being created and that affects confidence. When jobs are being created at home it also leads to job creation overseas.”

On present indications 2004 will be another struggle for IDA.

However chasing a substantial number of jobs is no longer IDA policy.

“We are going after knowledge-based industries that need to secure their futures and who see Ireland, because of its educational levels, high skills and access to Europe as offering the opportunities they require to secure their long term future,” he said.

On the jobs prospects for the current year he said: “If we can hold it as good as last year it would not be too bad in the present circumstances.”