Obama tax move ‘will hurt global recovery’
Professor Ray Kinsella of the Smurfit School of Business at UCD said: “It was inevitable that something like this would happen. While jobs for America is understandable from the point of view of what is happening in the US, on a global level where America has a responsibility to provide economic leadership this resonates of protectionism.
“Protectionism has been highlighted by G20 as a threat to global recovery. America has a very specific responsibility to provide global economic leadership, a role which it has assumed.”
Professor Kinsella admitted Ireland’s low tax regime is vulnerable and it has always been vulnerable.
“However, in a small open economy like Ireland, corporation tax rate is one of the very few economic policy levers that it has. It does not have, as America has, a very large domestic market. It does not have as America has, the capacity to print money. One of the few economic levers left is the corporation tax and it has used that very effectively.
“One of the basic points people overlook is that American multinational investment in Ireland is really investment in Europe. There is no guarantee that much of the multinational investment that has been made in Ireland would have been made in Europe had Ireland not offered the tax rate combined with other factors.”
He said the Irish economy has extraordinary resilience and had reformed itself during the 1960s and reinvented itself in the 1980s and 1990s.
“Until we blew it in the early years of this decade we achieved something that no other country achieved – a sustained period of economic stability and growth which has not been equalled in any other country. I believe that Ireland’s resilience is going to be demonstrated.
“I believe the budget was misconceived but there is a growing feeling we have to break new ground as we did in the 1960s, 1980s and 1990s. We have not been afraid to make big decisions in economic terms and if we can transcend political differences we have political advantages.”
He also said Ireland should not be too dependent on the US. “There has been a global shift in the world economy to countries like India and China. We would be very foolish to assume they are just in the business of low cost exports. They are competing in America’s mid-to-high value exports. We should aim to look beyond America.
“Lets not assume this is one way traffic. It is not. We provide a very high quality gateway into Europe.”
