CORPORATION TAX:IRELAND'S LOW corporate tax rate will not be changed by any future government coalition grouping, former taoiseach John Bruton said yesterday. He added that the importance of the tax policy is understood in every home in the State.
Mr Bruton’s comments came after questions from journalists in London, who repeatedly cast doubt on whether public opinion would remain behind low business taxes when income and other charges are to rise.
“There will be no change in that. It is the policy of the current Government. It will remain the policy of any foreseeable replacement government.
“It is not being questioned by the commission and it would make no sense to change it. It is rising more quickly than any other tax source.
“Corporation tax receipts exceeded expectations in the first 10 months of the year by €300 million. [The rate] is going to be the same in a year, in 10 years,” said Mr Bruton, who led a delegation of IFSC associations to London.
Rejecting charges that Ireland was running a predatory tax regime, Mr Bruton pointed out that Ireland collects 2.9 per cent of its gross domestic product in corporate taxes, compared with 1.1 per cent in Germany and approximately the same in France.
Pointing to the widely-held support for the 12.5 per cent rate in Ireland, Mr Bruton said it was agreed by Fine Gael, Labour and Democratic Left during his time as taoiseach, “a fact of which I am, I have to say, very proud”.
“I was once a politician and I had to satisfy the electorate. People in Ireland understand that FDI [foreign direct investment] is absolutely critical to the employment level that they and their families enjoy. There is no family in Ireland that doesn’t have a family member employed in a foreign firm. They know very, very well – perhaps in ways that they don’t in other countries – that this 12.5 per cent rate has been the basis on which many of these companies came to Ireland on the assurance that it would not change.”
Questioned about the prospect that some Irish banks may be sold off to foreign buyers, Mr Bruton said there would be no public opposition to such a development, saying that foreign banks had already bought Irish institutions.
Equally, he said, the IMF’s arrival was not resented: “I think it is fair to say that the Irish people have reacted positively to the intervention of the IMF assisting us in resolving our problems.
“The intervention is not seen in a negative way. If there is a sense of worry it is about getting ourselves into a situation where this was necessary,” said Mr Bruton, who represents the IFSC internationally.
“There is a very sophisticated understanding of all of this by the Irish electorate. This is probably one of the most internationally-focused populations in the world. Irish people have been travelling all over the world for generations.
“We understand the rest of the world in ways that perhaps more self-sufficient countries might not and that helps us this time in being willing to welcome banks from other countries coming in,” he declared.
Insisting that the Irish political system will face up to challenges, Mr Bruton said: “There will be an election and a budget within the next three months. The order in which these events occurs may be open to question, but the fact that both will pass into reality in that period is beyond question.”
Ibec director general Danny McCoy said the commission was not putting pressure on Ireland to change its rates, though he acknowledged that pressure has come from some member states, notably France and Germany.