Tax and sustainable industry development

 

Sir, – In “Ireland needs to upset the Apple cart on corporate tax” (Opinion & Analysis, October 25th), Prof David Jacobson argues that Ireland’s success in attracting multinational inflows has not resulted in sustainable development because Apple is still controlled outside Ireland. It would surely have been spectacularly naive to have expected Apple to have relocated their headquarters from California to Cork.

The piece asks us to accept that competition between states for multinationals is harmful. For whom? Has it been harmful to Galway that it is now an important global location for the medical device industry? Perhaps the harm is to some notional economic perfect market, where the world would be more efficient if companies set up operations where production or service provision is best suited. Has Tasc done an analysis to identify what percentage of our multinational employment would exist if that had been the criterion for investment?

Ireland and IDA Ireland’s great marketing achievement is to have made a country with a limited home market, little industrial skills and heritage and few natural industrial advantages a magnet for foreign direct investment. It could have tried to sell Ireland in the past on the basis of a low skill, low wage country. It chose instead to use tax as a means of overcoming our initial competitive disadvantages as a country and then build on the operations attracted to generate quality jobs. Despite the assertion in the opinion piece, foreign-owned multinationals have generated local development in areas like medical devices, software and many other sectors.

The argument that local industry has lost out from a lack of government focus and support as it is perceived to be of lesser importance is a very old argument and was one of the principal reasons why, 20 years ago, the original Industrial Development Authority was split into IDA Ireland and, initially, Forbairt but now Enterprise Ireland. Does the Tasc report present any reasoned arguments that that has failed?

It is, of course, true that the EU is working to reduce tax competition for foreign investment. I am perhaps a little sceptical that this is based on some high moral principles. Like competitors in any market, France would dearly love a level playing field in those areas where it is currently at a competitive disadvantage while preserving the “more noble” competitive advantages it enjoys in areas like size of home market and access to large state contracts. It is hardly a reason why Ireland should accept such tactics. – Yours, etc,

Dr ED DELANY,

Drumree,

Co Meath.