Donald Trump ‘will change US corporation tax rates’

The head of the Department of Finance said incoming US president, Donald Trump, would change corporation tax rates there and this could affect Ireland.

Department secretary general, Derek Moran, said Ireland’s economy was now exposed on two fronts: from Brexit, as well as from the Trump US presidency.

But Mr Moran said Ireland was rightly trying to capitalise on international changes, including Brexit, and still attracting foreign investment — an issue also addressed yesterday by Finance Minister Michael Noonan when he was in Davos for the World Economic Forum.

“FDI (foreign direct investment) will want to access the single market and Ireland is in a good position for that,” Mr Moran told the Oireachtas finance committee yesterday.

Trump pledged, during his election campaign, to reduce business corporation tax there from 35% to as low as 15%, which many fear will prompt US firms here to move home.

Economist Stephen Moore said that, after Mr Trump’s election, a “flood of companies” would potentially leave Ireland, and other countries, under the new US regime’s tax plan.

Mr Moran, yesterday, told the committee that the worst risks to the Irish economy were “external” and that Ireland faced exposure from both Brexit and the incoming US regime.

Under questioning from Sinn Féin’s Pearse Doherty, about potential US corporation tax changes, Mr Moran said there were different views about what might happen in Washington. “But the view is that something will happen, for the first time since 1987,” he told TDs and senators at the hearing.

However, protectionist measures were in place for any grave impact from Brexit or the US, it was added. Department officials explained there was a “rainy day fund”, agreed last year; plans to reduce the national debt; and ambitions to make Ireland more competitive or flexible, in the event of sudden changes.

Department assistant secretary general, John McCarthy, said there were “obviously lots of risks”, not just on the corporation tax side, but on the president’s side, in terms of a US protectionist policy. Nonetheless, on the upside, there was also the immediate potential of Mr Trump launching a “fiscal stimulus” package, which may have short-term benefits, added Mr McCarthy.

However, department chiefs said they had not yet modelled the “doomsday scenario” — the potential of an international trade war. Wexford TD Michael D’Arcy said this caused him concern: “You haven’t filled me with confidence in your level of preparedness for Brexit.”

Elsewhere, concern was expressed about only four staff working full-time on Brexit in the department.

Mr Moran said it was always a challenge “beefing up” his department. Recruitment was ongoing process and he wanted staff numbers to increase from 310 to 345.