US firms playing crucial role in road to recovery

NEW data has highlighted the massive role US multinational subsidiaries are playing in helping the economy get through the current crisis.

Besides contributing a third of all corporation tax and around €2.5bn in other taxes, increased investment by the multinationals here is also fuelling a boom in exports and a significant rise in the number of jobs advertised here.

An analysis by Keith Walsh, an economist with the Revenue Commissioners, showed that in 2009, US companies paid the Revenue €4.2 billion.

This was made up of €1.7bn in corporation tax; VAT and excise duties added another €1.8bn; and income tax revenue from the 100,000 employed by American firms came to another €698 million.

In 2008, US firms paid Revenue €4.7bn from a revenue stream of €41bn. US firms “have consistently contributed over one-third of all corporation tax revenue to the Irish Exchequer,” Mr Walsh said.

And the importance of Ireland as an overseas location for multinationals is highlighted in another finding produced by Mr Walsh.

Last year the IBM computer group ranked Ireland as first in the world in terms of job creation by foreign investment relative to population size, he said.

The analysis comes as latest figures show booming exports led to a record trade surplus of €45bn last year, driven by a 75% contribution by the multinational sector.

Initial figures from the Central Statistics Office show that in December exports rose by 21% compared with a year earlier to just over €7.2bn, indicating a rise of about 7% for the full year over 2009 levels.

Between 2007 and 2009, the corporation tax take fell by a massive 40% as the economy went into sharp decline. By comparison, the tax yield from US companies fell by a mere 4% over the same period.

US firms based here are heavily concentrated in the production of pharmaceuticals and medical devices which are to a large degree “recession-proof,” Mr Walsh said.

IrishJobs.ie said its jobs index shows steady upward trend in the number of jobs advertised in 2010.

Jobs advertised online for the production, manufacturing and materials sector experienced the highest increase, up by 22%.

It said the €5bn in FDI projects approved by the IDA over the last three years in manufacturing was now having a significant impact on the level of jobs being advertised.

The index for Q4 2010 showed the highest increase in new jobs advertised for production, manufacturing and materials, up 22% from the third quarter, it said.