It was Churchill who said, “For a nation to try to impose itself in prosperity is like a man standing in a bucket and trying to lift himself by the handle.” “
Maybe we missed a tip, because anyone who observes the flow of foreign investment to this country over the past decade would have to admit that it was our 12.5% tax rate that allowed us to ” lift by the handle ”.
It was wonderful as long as it lasted. But all indications suggest that the government will finally agree to raise the tax to 15pc.
Finance Minister Paschal Donohoe has so far done a gallant job playing in front of galleries to make it clear that Ireland was not for filming.
How could he not? Let’s face it, low corporate taxes have been the crankshaft of our economic engine for years.
But the world has changed. The feeling is that we must too.
With 140 other signatories to the OECD tax deal, even the dreaded Mr. Donohoe could not hold out any longer.
If reports that the plan – which has America’s backing – can now include a “firm” commitment that the tax will be set at 15pc are upheld, Donohoe will leave the field with his head down. Up to this point the position was to set the bar at “at least” 15pc, so further increases would more than likely follow which could have a serious impact on investment.
It is therefore essential that certain guarantees are put in place to avoid that we are forced to increase the rates to 18pc or 21pc across the board.
If the concession is granted, the country will be able to sign the framework agreement on Friday.
The advantage is that we have achieved a certain degree of stability while maintaining our integrity.
The deal will also significantly boost existing jobs here. However, it can also deter other people who might have considered moving here.
The prospect of fewer jobs in the future is something we may have to swallow. But we have the consolation of winning more taxes.
In the future, we will have to bet on other attractions than just taxation to attract multinationals.
During a recent visit here, the economic chief of the European Commission, Paolo Gentiloni, underlined that competitiveness is not only linked to minimum taxation.
It is linked, he said, to skills, education, academia and the business environment.
The tax is still contentious. The Prime Minister of King Louis XIV, Jean-Baptiste Colbert, summed it up succinctly: “The art of taxation consists in plucking the goose so as to obtain as many feathers as possible with the least possible whistling.
The Irish government has built a formidable reputation in the world market for collecting golden geese from other nations in the true tradition of free enterprise. Our success has caught up with us.
However, in recent years this hiss has grown too loud to ignore.
Once we accept the terms as they exist, we must also accept the responsibility for changing them.