Ireland 'cannot rule out lower corporate tax'

THE MANAGING director of Microsoft's Irish operations has said that a reduction in Ireland's headline and effective corporate tax rates should be considered in the future in order to protect the country's competitiveness.

Speaking at an American Chamber of Commerce lunch in Dublin yesterday, Paul Rellis, managing director of Microsoft Ireland and president of the American Chamber of Commerce in Ireland, said, "We must realise that we are no longer winning the race when it comes to corporation tax - many competitor countries are also tax-competitive and we cannot rule out a move to lower corporate tax at some point in the future."

He added: "There are countries that have much lower effective tax rates in eastern Europe and I think it's extremely important that we recognise that a more competitive tax rate brings a higher tax yield and generates a massive economic contribution."

Given the global and national economic climate, Mr Rellis highlighted the importance of improving Ireland's competitiveness in other areas, and referred to the rejection of the Lisbon Treaty as a "blot on our copy-book", adding that anything that can make Ireland more competitive is very important. "In this context, the Government must deliver in the forthcoming Budget and deliver measures which will regain control of the public finances, ensure wage restraint, increase productivity in the public sector and continue to invest in critical infrastructure projects.

"Failure to do so will result in diminishing confidence among the investment and business community in our ability to meet the current challenges," he said.

He also called on the Government to forge ahead with its commitment to capital spending, as outlined under the National Development Plan (NDP).

"Ireland ranks 25th in the OECD 28 for infrastructure quality, and Government must commit to maintaining its investment in key infrastructure projects which will provide businesses with access to global markets and ensure we are not disadvantaged because of poor transport links," he said.

While he welcomed the Government's decision to bring forward the Budget to October, as it sent out the "right statement to international investors", he would like to see the Government's commitments to productive investment in the NDP, such as the Next Generation Broadband network and completion of motorways, adhered to, as they will "generate a much more productive and efficient economy".

In the medium term, Mr Rellis said a "radical overhaul" of the education system was needed, citing recent "alarming" failure rates in maths and science subjects, and adding that the Government should work on educating people for jobs and technologies that have yet to be developed.