European Common Corporate Tax Base

ixtlan

The Rooster wrote: »

The CCTB will be bad for Irish business and bad for Ireland. Ireland cannot be forced to bring it in, but there is a questionmark over what happens if a number of EU countries do bring it in and we stay outside. Can it still erode our tax base even if we stay outside? How will the CCTB interact with existing treaties?

The CCTB has nothing to do with Lisbon.

I assume a number of countries could agree a common rate, but as you say Lisbon does not affect this. They could have done this by joint agreement outside the EU anyhow. The only minor advantage doing it inside the EU would bring would be that some of the admin and organisation could be handled by the EU itself, plus some businesses might find it helped them with cross-border dealings.

However if some countries want to do this so be it. If it's a higher rate than us, why would we care? If it's a lower rate maybe we would want to join?

Again I must make the point that it is not necessarily a good thing that all we EU countries vy with each other to offer the lowest possible tax to multi-nationals. The countries with the highest rates are those with the public services that everyone seems to aspire to. Admittedly it's not a simple balance to strike, but everyone including Sinn Fein are striking very much towards letting the corporations make as much profit as possible. 7bn is not a trifling amount of tax. Even 2bn (if the rate was reduced) is not small. Taken to it's logical conclusion according to everyone involved in this debate, corporations should pay no tax. After all if it's the right thing for Ireland to do it must be right be everyone else, and we would end up in a downward spiral of lower tax and bigger profits.

Lisbon does not change tax policy but let's at least acknowledge that this is a double edged sword.

Ix.

sink

That is why i'm all for leaving the tax rate as is. I don't see any threat of a cctb anytime soon. Lowering tax will have minimal effect on our competitiveness atm. Multinations don't just compare one single tax rate to judge where it is best to invest, they look at everything. That is why we need to improve infrastructure, cut red tape, and improve services. The tax rate is only been focused on at the moment because the media and the no campaign are using it to cause hysteria.

Peter Fitz

sink wrote:

Lowering tax will have minimal effect on our competitiveness atm. Multinations don't just compare one single tax rate to judge where it is best to invest, they look at everything. That is why we need to improve infrastructure, cut red tape, and improve services.

That is to discount the view of the American Chamber of Commerce & the CEO of Microsoft in Ireland as posted above. It is of course just one of a number of issues on the radar of multi nationals, but when the CEO of Microsoft says that the low corporation tax rate is the 'prime reason why companies choose to remain in Ireland', it cannot be dismissed as a minor element of economic policy.

Ix, 2bn is of course not an insignificant sum, but it can be managed, to focus solely on 7bn direct revenue from multi national corporations is to ignore the massive ancillary contribution through investment, expenditure, payroll etc.

I take the wider points on the virtue or otherwise of the low tax model & possible strain on funding for services, depending of course on how the gov of the day distributes available revenue.

As stated before, a rate of 0% is not an option, i doubt anything lower than 8% is feasible, but there is scope for further reduction. All other issues mentioned either take time or are difficult to resolve, this is something government can move quickly on if they have the bottle.

sink wrote:

The tax rate is only been focused on at the moment because the media and the no campaign are using it to cause hysteria.

I have not heard mention of reducing the rate in any media outlet, which is why i posed the original question, why not?

All media comment seems to be focused solely on harmonisation & whether we can retain the rate in the midst of spurious arguments thown in by the 'No' side to damage Lisbon.

sink

Look, we basically agree that low taxes are the way to go. What I read from the American chamber of commerces comments is that low tax is the 'only' reason they are still in Ireland. We have lost our competitive advantage in almost every other area. We can't just keep lowering the tax rate to compensate for everything else falling to pieces. 12.5% is as low as I would go at present if I was finance minister, I would use the revenue from that to plough back into areas we have fallen behind. I believe this will give a far greater long term gain than any short term benefit from lowering the tax rate a few percent. 12.5% percent is still a very competitive rate when compared to the bulk of our competition in Europe. The fact that UK based companise are relocating their HQ's here stating low tax as the reason attests to that. So long as that continues I don't see any reason to lower it further, if the situation changes then a lower tax rate may be required.

sink

I forgot to add that I do not believe that multi-nationals are going to pull out of Ireland, they are still making very decent profits in a downward economy. I see there comments a polical move to see if they can force the government to lower taxes when they don't have. Of course companies are always going to want lower taxes and the statement you quoted won't hurt them in any way. It's kind of like bargaining at the market you have see behind the words, and look at their real agenda, it's a basic negotiating skill.

guinnessdrinker

Peter Fitz wrote: »

As stated before, a rate of 0% is not an option, i doubt anything lower than 8% is feasible, but there is scope for further reduction.

I still would not rule out a 0% rate. Not at present but in the near future. The 12.5% rate certainly needs to be reviewed. Since that rate was bought in and attracted foreign investment there have been many other factors that have changed that may adversly affect multinationals setting up here. High wage rates being one of the main factors.

We should not over rely on the 12.5% rate indefinetly.

sink

There is a very interesting article in the Irish Times today from a British ecnonomist.

http://www.ireland.com/newspaper/finance/2008/0516/1210883228945.html

His take is basically it's an international race to the bottom and while small low tax economies like Irelands will benefit. The UK and other large economies are seriously loosing out. He also points out that there is very little anyone can do about it as the UK themselves would likely veto any cctb as the public would see it as a loss of soverignty and it would be polical suicide.