Wel all have to take the pain, so what about Corporation Tax?

Berti Vogts

Darragh29 wrote: »

I still don't get your point, what has that got to do with Corporation Tax??? Profit is still profit, tax on profit is still tax on profit.... What you are referring to there is how Revenue deal with taxation of loans to directors or loans that are forgiven or taxation of distributions to shareholders. If a company makes 100,000 Euro profit, it has a Corporation Tax liability at the moment of 12,500 Euro. This remains the case regardless of whether the company is a "close company" or otherwise. What I'm suggesting is that if we upped the CT liability to 15K per 100K profit, I don't see how this cannot be interpreted being a positive contribution towards our economic renewal and recovery.

Of course all the vested interests will come out and say, "that is sending out the wrong signals", grand, fix the new rate for 5 or 10 years, end of argument...

"A surcharge of 20% is payable on the total undistributed investment and rental income of a close company. Close "service" companies are also liable to a surcharge of 15% on one-half of their undistributed trading income".

What part of that paragraph is unclear?

Nodin

Darragh29 wrote: »

Apparently we are looking at income tax increases imminently. Grand. Household water charges are also coming along soon apparently, grand. A property tax, grand. 3rd level fees will be coming back apparently, grand.

Now all I'm asking is all those business leaders/owners driving 08 Range Rovers and BMW X5's, and they are the poor one's, what about the extremely wealthy businesses putting Porches and DB9's under their MD's arses. What's the story there???

WHy are we not hearing about a rise in our world leading rate of Corporation Tax which is and has been for many years, a hugely generous 12.5%. How about pushing that up to 15%???

Seems reasonable.

Berti Vogts

Darragh29 wrote: »

Of course all the vested interests will come out and say, "that is sending out the wrong signals", grand, fix the new rate for 5 or 10 years, end of argument...

The vested interests like those working in MNCs?

bmaxi

Obama is already talking about increasing taxes on U.S. companies who send jobs abroad. The main reason U.S. companies operate here is low corporation tax, coupled with access to the E.U., it is our major selling point.
I think it would be disastrous to increase it and when the details of Obama's intentions are known, we really should be lowering it to compensate.

Darragh29

Possibilities wrote: »

"A surcharge of 20% is payable on the total undistributed investment and rental income of a close company. Close "service" companies are also liable to a surcharge of 15% on one-half of their undistributed trading income".

What part of that paragraph is unclear?

I'm not talking about undistributed investment of rental income, or surcharges of 15% on one half of undistributed trading income. I'm talking about Corporation Tax and nothing else. Please read the thread title.

vinylbomb

Darragh29 wrote: »

Because it is a sign of wealth. If you can afford trophy cars, you cannot argue that a 2.5% rise in CT would kill your business...

For every person driving an X5 (IMHO they are mainly self employed - builders, publicans etc) theres a dozen more driving Civics or Focus' or Datsuns or whatever. And you can be guaranteed that in some way/shape/form they are reliant on multinationals being present here. Raise corporation tax and its those people who end up losing their job, because you erode the profit margins of their employer, which is already probably wafer thin given our lack of competitive-ness.

Its a ill-thought suggestion that kinda sounds a bit lefty to me.

Berti Vogts

Darragh29 wrote: »

I'm not talking about undistributed investment of rental income, or surcharges of 15% on one half of undistributed trading income. I'm talking about Corporation Tax and nothing else. Please read the thread title.

They go completely hand in hand. It is disingenuous to ignore it.

Darragh29

Possibilities wrote: »

The vested interests like those working in MNCs?

I used to work for an MNC. These companies can well afford to pay. Of course they will tell you that they can't but the truth is that they can. 15% CT is still extremely generous. Cowen is telling us that those who can afford to pay more will be shouldering the greater burden. As usual he is talking the talk but cannot walk the walk and talking out of both sides of his gob again.

Darragh29

Possibilities wrote: »

They go completely hand in hand. It is disingenuous to ignore it.

They don't and this isn't the economics forum. A company at the end of a financial year has a net profit that is subject to Corporation Tax. This is currently taxable at 12.5%. It seems that every tax heading will be increased except this particular tax. I don't think that this is fair...

Berti Vogts

Darragh29 wrote: »

They don't and this isn't the economics forum. A company at the end of a financial year has a net profit that is subject to Corporation Tax. This is currently taxable at 12.5%. It seems that every tax heading will be increased except this particular tax. I don't think that this is fair...

For god's sake, it's a form of CT...change the record.

Raising CT would be daft and counter productive.

Mr.Micro

Darragh29 wrote: »

I used to work for an MNC. These companies can well afford to pay. Of course they will tell you that they can't but the truth is that they can. 15% CT is still extremely generous. Cowen is telling us that those who can afford to pay more will be shouldering the greater burden. As usual he is talking the talk but cannot walk the walk and talking out of both sides of his gob again.

Too right, he will have to check with the golden circle and the cronies before he does anything that might affect them.

IRLConor

Darragh29 wrote: »

I used to work for an MNC. These companies can well afford to pay. Of course they will tell you that they can't but the truth is that they can. 15% CT is still extremely generous.

It doesn't matter whether the MNCs can or can't afford to pay. They don't want to and when you're that big you get to choose where you pay your tax. Raise the tax by enough and they'll move, it's not like they have a negative-equity mortgage and kids in school to keep them here. :rolleyes:

Darragh29

Failure to make companies pay more is to continue pandering to businesses. Pandering to vested interests is what has us in this complete mess. I didn't see a box to tick for Microsoft or Google on the ballot sheet last time I voted.

We ALL have to chip in here and take some of the pain, only apparently YET AGAIN, except for the wealthy.

Berti Vogts

Darragh29 wrote: »

Failure to make companies pay more is to continue pandering to businesses. Pandering to vested interests is what has us in this complete mess. I didn't see a box to tick for Microsoft or Google on the ballot sheet last time I voted.

We ALL have to chip in here and take some of the pain, only apparently YET AGAIN, except for the wealthy.

Yeah, lets tell all them MNCs to go where the sun don't shine:rolleyes:

Darragh29

IRLConor wrote: »

It doesn't matter whether the MNCs can or can't afford to pay. They don't want to and when you're that big you get to choose where you pay your tax. Raise the tax by enough and they'll move, it's not like they have a negative-equity mortgage and kids in school to keep them here. :rolleyes:

None of us want to pay more tax, it's time to get real and if we are going to bother fixing this mess in the first place, then everyone is going to have to contribute. That means increases in EVERY tax heading. Businesses cannot be allowed to call the shots here, I'm saying this as a business owner. We can't continue pandering to vested interests that threaten us. If you don't want to stay here, fine, go back to the US where the Corporation Tax rate is over 30%.

This is what has brought us here, a politcal class that has pandered to every whim and cry of businesses. Now we are nearly broke. It's time to grab the liarodi's and get back in control of the bridge again.

IRLConor

Darragh29 wrote: »

Failure to make companies pay more is to continue pandering to businesses. Pandering to vested interests is what has us in this complete mess.

"Pandering to businesses" -> "Pandering to vested interests".

I see what you did there.

Yes, pandering to vested interests is a bad thing. Pandering to all business, in a non-discriminatory way, is precisely what the government should be doing. We desperately need more jobs in this country and punishing those who create jobs is not the way to go about it.

Darragh29

Possibilities wrote: »

Yeah, lets tell all them MNCs to go where the sun don't shine:rolleyes:

No, let's communicate to them that they have had it extremely extremely well for the last 15 years in Ireland. We now have a major problem with the economy that requires them to contribute a bit more. We will continue to make Ireland a low tax economy for companies, and when things are looking better, we will lower the rate again. We won't rise it above 15% betweeen now and 2019, so they don't have to worry about us inching the CT rate up to 30% plus. Fair is fair lads, when times are good, you made a killing, now we need to face up to reality and revisit the figures for a few years.

Pride Fighter

http://upload.wikimedia.org/wikipedia/commons/f/f0/Ireland_tax_comparision.jpg

Interesting graph there. But the nations our corporation tax rate are compared to have a huge indigenous manufacturing base. As we have no indigenous industry or natural resources our corporation tax has to be low to attract investment. We should lower it to 10% IMO. I know it is a liberal economic move but a certain amount of liberal economics are necessary to create wealth, wealth which in turn will provide free medical cards for over 65's and under 18's and a comprehensive health insurance plan for those working.

IRLConor

Darragh29 wrote: »

None of us want to pay more tax,

True, but most of us don't get a choice.

I do, since I have no mortgage, no kids and a skillset that's still in demand. I can move if the tax burden here becomes onerous. Most people aren't that lucky though.

The bigger the company, the more likely they'll be in the position to bugger off.

Why are you so fixated on raising taxes though? Surely it would make sense to reduce government expenditure instead? At least that way you don't put as many jobs at risk!

Darragh29 wrote: »

I'm saying this as a business owner.

And I'm saying this as someone who used to be a business owner. Corporations have no loyalties to countries, they'll move to wherever suits their interests best. You can't say:

Darragh29 wrote:

Fair is fair lads, when times are good, you made a killing, now we need to face up to reality and revisit the figures for a few years.

and honestly expect them to stay! Do you really believe that they think that they owe Ireland something?

eoinbn

Darragh29 wrote: »

Failure to make companies pay more is to continue pandering to businesses. Pandering to vested interests is what has us in this complete mess. I didn't see a box to tick for Microsoft or Google on the ballot sheet last time I voted.

We ALL have to chip in here and take some of the pain, only apparently YET AGAIN, except for the wealthy.

You aren't thinking this one through.

Microsoft/Google/Dell/Intel etc didn't elect the clowns in FF that got us into this mess, so why should they be 'putting their shoulder to the wheel'? If we try and get mobile multi-nationals to pay for our wn mistakes then they will show us how mobile they really can be. Lets not forget it was these companies that got our country up and running, before FF starting pumping it with steroids.

edit: It's not like these companies are making a forunate atm. Some of the worlds biggest companies are really struggling atm and laying off tens of thousands. Raising taxs on companies that are losing money isn't going to improve our finances and will just make them think twice about relocating so that they can maximise profits when the world economy comes back. The best thing we can do is to make sure that when it comes back that our costs are down so that we can compete for the jobs that these companies will be offering.

dresden8

What you're straining at and think is wrong, which is what I agree with you about, is that multi-national corporations are much more important than national governments.

They do what they want when they want and have enough clout and money to tell everyone to eff off anytime they want.

P1ss them off, they will destroy the country.

End of.

machintoshlover

Your argument is that everybody has to tighten their belts so why shouldnt the MNC's?

The objective of raising taxes is to help plug the hole in the public finances along with cuts in expenditure. Do you think if we raise the CT rate MNC's will stay? You may or may not have noticed that MNC's are cutting costs globally and are facing turmoil times - raising the tax rate means MNC's costs will increase when at this very time they are minimising costs - the sad truth of the matter is that if costs increase for MNC's they can just leave the country and move where there is a lower cost base.

So you raise the CT rate - MNC's leave -what tax they were contributing through CT is now gone, employees arent paying income tax, they have alot less money to spend on goods - less VAT collected. Now think of employees who arents directly related to an MNC but may be part of a support company - they are made redundant and similar taxes are lost. There's a ripple effect.

It's not logical to raise the CT rate there would be only a net loss in taxes and further woe.

RealityCheck

machintoshlover wrote: »

Your argument is that everybody has to tighten their belts so why shouldnt the MNC's?

Thats probably because most of them can up sticks and move in the morning whereas the whole population of the country aint going to leave at the drop of a hat. Capitalism is not fair and was never meant to be.

BrianD

Darragh29 wrote: »

A 15% Corporation Tax rate is still extremely generous. It could be frozen at 15% for the next 5 years to stop MNC's running out of the country.

It seems we all have to take a hit except big businesses. And who bankrolls Fianna Fail??? Big businesses...

In fairness, I don't think it's the like of Microsoft, Pfzier etc. who are bankrolling FF. After all, the income from corporation tax goes straight into the Revenue coffers and is used to fund all that is budgeted by the Government. Ultimately, many of these companies would leave Ireland and 12.5% of whatever they currently make is better than 15% of nothing.
`

Darragh29 wrote:

No, let's communicate to them that they have had it extremely extremely well for the last 15 years in Ireland. We now have a major problem with the economy that requires them to contribute a bit more.

This is not how business works at any level. If the local business is losing money for what ever reason he or she can't turn around and say "ah sure I've had it great for the past few years". they'll go bust! They try and resolve the problem so they can continue to trade sucessfully. Fixing the Irish economy is not the responsibility of any business let alone a multi-national.

We will continue to make Ireland a low tax economy for companies, and when things are looking better, we will lower the rate again. We won't rise it above 15% betweeen now and 2019, so they don't have to worry about us inching the CT rate up to 30% plus. Fair is fair lads, when times are good, you made a killing, now we need to face up to reality and revisit the figures for a few years.

Unfortunately, business can't work on the basis that a government may or may not sort out it's economy and problems. If, for example, Poland offers a 5% CT rate then it would make sense to move there immediately. Imagine if you stayed in good old Ireland while your competitors high tail it to Poland?

Here's a personal example, if there was no government guarantee for your bank savings and you heard your bank of many years was in trouble. The decent thing is for you and everyone else to leave their deposits in until the bank rides out the trouble. A run will destroy the bank. Would you wait and leave your money in?? Of course you wouldn't. You have to look after your self interest. Ultimately, it's the same decision that faces the multi-nationals.

Also, I'm not sure if any company locating itself in Ireland made a killing here. They did good business but I doubt it was a killing.

It's the construction industry that FF has been pandering to with extensive tax breaks, generous and often unsustainable rezoning of lands and so on. This sector has probably paid less tax than the MMC and exhorted more influence and contributed more to the fine mess that we find ourselves in.

Lemming

Most of the good arguments against a raise in CT have been made already. I'd just like to point out one other rather subtle point to Darragh and others hell-bent on this particular ... well-thought-out choice of action;

None of the MNCs presently in Ireland and contributing well beyond CT take (employees, subsidary business knock-on, etc.) are Irish ...

That means no loyalty, no "duty", no sense of "chipping in". They can - and will - tell us all to get f*cked royally (and we would be in that case) and go elsewhere if this course of action is pursued.

BlaasForRafa

Darragh29 wrote: »

None of us want to pay more tax, it's time to get real and if we are going to bother fixing this mess in the first place, then everyone is going to have to contribute. That means increases in EVERY tax heading. Businesses cannot be allowed to call the shots here, I'm saying this as a business owner. We can't continue pandering to vested interests that threaten us. If you don't want to stay here, fine, go back to the US where the Corporation Tax rate is over 30%.

This is what has brought us here, a politcal class that has pandered to every whim and cry of businesses. Now we are nearly broke. It's time to grab the liarodi's and get back in control of the bridge again.

If Ireland did something as retarded as you suggest then say hello to 20% unemployment. I have no idea why you're continuing to argue your case as it just dosen't hold water.

Darragh29

Lemming wrote: »

Most of the good arguments against a raise in CT have been made already. I'd just like to point out one other rather subtle point to Darragh and others hell-bent on this particular ... well-thought-out choice of action;

None of the MNCs presently in Ireland and contributing well beyond CT take (employees, subsidary business knock-on, etc.) are Irish ...

That means no loyalty, no "duty", no sense of "chipping in". They can - and will - tell us all to get f*cked royally (and we would be in that case) and go elsewhere if this course of action is pursued.

There are several reasons why MNC's cannot just tell us to shove it up our ars*s if we raise Corporation Tax.

First of all, many of them have invested in infrastructure that cannot just be loaded onto the back of a truck and driven to another country.

Secondly some would have to repay the IDA substantial grants that were received.

I don't know if other people are seeing what I'm seeing here, but it look's to me like yet again, this government have created another bubble that is ultimately going to burst, (as I was told my a mate recently, bubbles always burst, because that is what bubbles do!), and have let a load of foreign companies get an angle/advantage on us.

Just like we became dependant on a construction sector that was unsustainable, we are now obviously overly dependant upon a small enough number of foreign MNC's that have no allegiance to this country whatsoever, other than for the purposes of enjoying a 12.5% rate of Corporation Tax.

It is clear that we have a tail wagging the dog situation here. These MNC's have been sending out spook stories for years now, "we'll walk if you do this that or the other". Fine, then f*cking walk so. We have a country to run here and it's time we stopped pandering to these idiots who run closed shops, who tell us what our tax rates will be, who talk absolute sh*te about "our employees are what makes our company so successful" only to relocate to Poland at the drop of a hat.

These companies are not our future, we may as well make as much as we can out of them while they are here, because sooner or later, they will all find a cheaper location to do business from...

In any event, I'm sick of hearing how vital these companies are so vital to our economy. Take IBM for example, I think they employ around 3,000 people in Ireland, I'm not sure but take any MNC that employs around 3,000 people here as an example. That number of people are losing their jobs here now on a weekly basis in this country.

It's like boiling frogs. If you put a frog into a saucepan of cold water and increase the temperature gradually, he will stay in the water and boil to death. If you throw the same frog into a sauce of boiling water, he will leap out straight away. That is all that is happening here, we are watching frogs boil.

How come we don't get outraged when 3K more people will be unemployed next Friday than are unemployed tomorrow morning, but if an MNC comes out and says they might make people redundant if we increase Corporation Tax of don't follow their wish list of requirements, it scares the bejesus out of us???

We seriously need to grow ourselves a pair and ask these companies are they only here for the Corporation Tax or have they anything more to offer... If this is all they are here for, we need to come up with ways to replace the jobs they bring as a matter of urgency.

Darragh29

BlaasForRafa wrote: »

If Ireland did something as retarded as you suggest then say hello to 20% unemployment. I have no idea why you're continuing to argue your case as it just dosen't hold water.

It's retarded in your opinion because you are just repeating and accepting the mantra that everyone is saying, "don't rock the boat, don't look at the monster in the room, pacify him by all means, because everyone says he is mad and could do anything"...

Now I'm suggesting that if the rest of us are being hit extremely hard for money, then it is entirely reasonable and rational that small and large corporate entities can and should be looking at a more challenging tax exposure in more challenging times, just like the rest of us...

We should all be in this together, what sort of signal is it sending out to people who are being hit for 400 Euro extra a month, that huge businesses are not being hit for a single cent. Don't forget, companies are legal entities in themselves and do not get hit for PAYE increases, an income levy, a VAT increase or a public sector pay levy...

So PAYE workers are losing jobs at a rate of around 3K a week I estimate, or the ones with jobs are being put on short time hours or taking 10% pay cuts, public sector workers are a minimum of 400 Euro a month worse off now than before, a huge hit by any measure, but businesses have yet to be hit for a single cent???

Red Sleeping Beauty

I read an article in the Guardian there about UK businesses registering their companies in Ireland to avoid paying Corp. Tax over there. Not sure if they pay it here though. Are there many Irish businesses registered abroad so to avoid Corp. Tax ?
I'm not too well up on Irish Businesses.

mickoneill30

Darragh29 wrote: »

First of all, many of them have invested in infrastructure that cannot just be loaded onto the back of a truck and driven to another country.

Which ones have invested in all of this infrastructure. The only one I know of is Intel and they rotate their fabs every 10 years or so. Their profits have reduced massivly over the last year. So they either re-invest hugely every few years or move. So they can't move easily now but they can in the next few years.

Who else is there?

Darragh29 wrote: »

Secondly some would have to repay the IDA substantial grants that were received.

Simple maths there. If bigger tax over the next 3 or so years > the IDA grant + cost of moving then move.