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  • irishtimes.com - Posted: November 18, 2010 @ 11:16 pm

    The red line in corporate communications

    Laura Slattery

    After two years of cuts and cut-threats; after a week of high-level Government stuttering, evasiveness and alleged ”pejorative terms”; after days of being left in the dark, finally the nation’s parents, pensioners, students and long-term sick have the reasurrance that they and their fellow citizens have been crying out for. Yes, the Government has promised us that the 12.5 per cent corporation tax rate will remain intact.

    Batt O’Keeffe sent out a press release saying the Government was “not for turning”. (This instantly made me think that it will be.) Mary Coughlan told the Dáil it was non-negotiable. (I don’t know about you, but I’m starting to think it is.) And Brian Lenihan told RTÉ that the sacred corporation tax rate was an “absolute red line” (that’s beginning to blur).

    Notwithstanding all this collective defiance, the front page of The Financial Times tomorrow asserts that “Ireland faces tax showdown”. And despite the complaint by the former editor of The Sun, Kelvin MacKenzie, on the BBC’s Question Time that Ireland is “undercutting” the UK corporate tax rate – “I want them to be a good neighbour to us and stop trying to nick companies out of this country” – it is, of course, the Germans and the French, and not the British, who would like Ireland’s corporation tax to kowtow less to transatlantic business interests.

    The American Chamber of Commerce, which next Thursday will feed Brian Lenihan a Thanksgiving lunch in exchange for more supportive words, was quick to reiterate its belief that any increase in the corporation tax rate would damage the economy and result in an exodus of job-providing US entities, some of which are quite adept at utilising tax avoidance schemes to bypass the 12.5 per cent rate anyway. But not everyone agrees that this precise rate is an economic saviour to be protected at all costs. Last month, Don DeGrazia, the US-based former chairman of global accountancy network Integra International, helpfully quantified matters by noting if Ireland’s corporate tax rate was increased to 15 or 16 per cent, “Ireland would still be competitive and thus attractive” to inward investors.

    Never mind all that for the moment. The 12.5 per cent rate, despite its sharp ideological edge, has become a sticking point – a symbol of our sovereignty, behind which Ireland’s ministers will unite, on-message, for the day, as it plays what The Guardian dubs “geo-political hardball”. Its posturing is also, presumably, aimed at any multinationals that, right at this exact moment, happen to be deciding where they should plump a job-spinning factory.

    But regardless of how vital the 12.5 per cent rate is, or isn’t, to employment, it is curious that the Government is less willing and able to make a similarly concerted, Cabinet-wide attempt to soothe the fears and anger of Irish citizens worried about the safety of their deposits, the status of their mortgage arrears, the future level of their pensions and the state of their schools and hospitals. On balance, I think I preferred it when it was still considered worth the Government’s while to make (even obviously empty) promises to the Irish people. The alternative is that we’re no longer worth lying to, as it, the IMF and European officials just thrash it out amongst themselves.

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