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

Darragh29

eoinbn wrote: »

That was what I said in one of my first posts on the board

That's would probably be the best way for the country, but it would really burn some people which is why it won't happen. There is thousands of families all over this country up to their eyeballs in debt. It is impossible for a government to implement cuts/taxs that would cause a large of these people to go under.
Here are the next few steps:

1. More cuts/taxs- people revolt, election.
2. New government either tries the same and fails or tries to appease which leads to us going bust.
3. Either way we will need a bailout from either the EU, if we are lucky, or IMF if they have any money left.

This is like looking at a not too distant comet hurtling towards the earth. The longer we sit and look at the comet getting bigger as it approaches, the more difficult it becomes to deal with and the more frazzled we will get. If we do nothing, then the only outcome is well understood. I can't for the life of me understand why this government is not acting with the kind of urgency that we now expect. The point of no return is imminent, if they leave this for much longer, then no amount of action will fix the problem because it will be too late, the comet will be upon us...

Permabear

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Darragh29

donegalfella wrote: »

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13.5%, 14%, 14.5%, 15%, these are all still very low rates of Corporate Tax. We didn't give these businesses any commitment that we would never raise Corporation Tax. We indicated that we would keep Corporation Taxes low and if we raised the CT, it would still be a very low rate if not still THE lowest, in comparative terms internationally.

By treating these companies as untouchables, we are sending them a message that we are afraid of them. I don't agree that we should continue doing this, the government run the country and set tax rates, not Microsoft or Dell...

Permabear

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Darragh29

donegalfella wrote: »

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So if the Irish government raised Corporation Tax to 15%, which would be a huge jump, it would more than likely be raised to 13%, 13.5%, if it was going to be changed at all, you'd take issue with this and move your business into Northern Ireland where the Corporation Tax rate is 28%???

cm2000

ridiculous suggestion by op, Business has been the engine of growth in this country, taxing them more would be incredibly counter-productive (and probably would not increase tax revenue). Many are shedding their workforces already because costs are too high and you want to make their costs higher?? have you any idea what that would do to our already decimated competitiveness? Stupid idea. Put it to bed.

Mena

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.

They may be able to afford to pay, but are they prepared to? I'd venture that would be a big no, and you'd have more of them leaving. Then where would we be? Because lets face it, without the MNC's Ireland is pretty well screwed jobs wise.

Darragh29

cm2000 wrote: »

ridiculous suggestion by op, Business has been the engine of growth in this country, taxing them more would be incredibly counter-productive (and probably would not increase tax revenue). Many are shedding their workforces already because costs are too high and you want to make their costs higher?? have you any idea what that would do to our already decimated competitiveness? Stupid idea. Put it to bed.

Corporation Tax is not a cost. It is a tax on profit, nothing more and nothing less.

cm2000

Darragh29 wrote: »

Corporation Tax is not a cost. It is a tax on profit, nothing more and nothing less.

normal profits are a part of normal costs and that analysis is irrelevant anyway. It makes it more expensive for them to be here, thats the key. We need to be lowering costs for business. we need to make Ireland more competitive. that is vital.

woodseb

how about we raise stamp duty aswell to compensate for the reduced revenue from the property market:rolleyes:

we should be cutting costs rather than raising taxes in the economy

Darragh29

woodseb wrote: »

how about we raise stamp duty aswell to compensate for the reduced revenue from the property market:rolleyes:

we should be cutting costs rather than raising taxes in the economy

Of course we should, but we can't because we can't afford to.

MG

Darragh29 wrote: »

Corporation Tax is not a cost. It is a tax on profit, nothing more and nothing less.

Profits and the jobs that go with them are fairly portable - as such companies can view tax as a cost because they can choose certain structures and locations to minimise this cost.

No offence but have to say that the OP shows an astonishing lack understanding of business & economics.

woodseb

woodseb wrote: »

how about we raise stamp duty aswell to compensate for the reduced revenue from the property market:rolleyes:

Darragh29 wrote: »

Of course we should, but we can't because we can't afford to.

:eek:

MG wrote: »

No offence but have to say that the OP shows an astonishing lack understanding of business & economics.

couldn't have said it better myself....

Darragh29

MG wrote: »

Profits and the jobs that go with them are fairly portable - as such companies can view tax as a cost because they can choose certain structures and locations to minimise this cost.

No offence but have to say that the OP shows an astonishing lack understanding of business & economics.

There is no lack of understanding here at all. When I do my annual return to the CRO and file my end of year tax returns, I'll be scheduled to have made a substantial profit in my business. Now I'm saying that in these times, I'd gladly forfeit some of that to "shoulder the wheel" as we are being asked to do lately. Now if the rate of Corporation Tax was increased tomorrow morning and I had to pay an extra couple of grand in Corporation Tax, it won't be hurting anyone, nobody will not be able to make ends meet over that decision, nobody will struggle that bit harder to pay their mortage if that happens. All that will happen is that I'll have a Corporation Tax liability of 1-2% higher than I already have, so instead of for example having to write a cheque for 12.5K per 100K of profit, I'll have to write a cheque for 13.5K or 14.5K or 15K per 100K of net profit.

But the government won't touch me for that because they are letting other larger businesses, who are even better positioned to pay than I am, run the show.

Does this sound fair??? Because it certainly doesn't sound fair or equitable to me.

MG

Darragh29 wrote: »

Now if the rate of Corporation Tax was increased tomorrow morning and I had to pay an extra couple of grand in Corporation Tax, it won't be hurting anyone, nobody will not be able to make ends meet over that decision, nobody will struggle that bit harder to pay their mortage if that happens.

Of course, it will hurt someone, you'll have less money to invest in your business, less money to invest in your staff, less cashflow to pay your creditors, less incentive to innovate for profit and all to pay for an inefficient service.

Fair play to you if you can afford to and are willing to take the on an extra burden but there are plenty of companies, large and small for whom tax is a marginal issue in terms of survival or choice of location.

As we know, private industry is the creator of wealth in this country. Creation of wealth is a good behaviour which should be rewarded. Punishing good behaviour is counter productive. The first question of any tax should not be fairness, that is a secondary consideration. The first question is what behaviour is it promoting.

whatisayis

One very important point that people seem to be missing here is that in 1998 a State Aid agreement was made with the EU in which corporation tax for manufacturing in Ireland was increased from 10% to 12.5% effective from 2003. Any manufacturing agreements that had been in place prior to 1998 were allowed to keep the 10% rate until 2010. That is the rate Intel, Dell etc. are paying at the moment, not 12.5%.

Intel are in the process of building a 300m 65nm wafer plant in China and plan to be operational in 2010. Dell will have closed all manufacturing in Ireland by the end of 2009...... These decisions were made before the economic meltdown in Ireland so it could be argued that the increase in corporation tax effective from 2010 had an impact on those decisions. When you consider the profits they are making 2.5% is quite a lot of money!

Ireland has already become a high cost location for business and I can't think of any reason, other than the low corporation tax, why anyone would consider investing in Ireland. At the moment there are very generous grants for those who wish to invest in R & D projects and that is why you are seeing a decrease in manufacturing and an increase in R & D. Once those grants go, so will future investment in this sector.

ongarite

Totally with whatisayis. Dunno where the impression that MNC are rolling in money in Ireland and "can take" tax increase for the good of the country.
Many many MNC in this country are on the edge of leaving for good and the last thing you want to do is push them over the edge.
This year Intel will decide the future of its 3 FABs in Ireland. The expense of them has been written off years ago and the equipment is now outdated and Intel has lots of spare capacity worldwide.
HP is on short-time work week and more than likely will close inkjet manufacturing leading to massive job losses.
Bausch & Lomb on short time week, Wyeth & Pfizer merger will lead to more plant closures if they feel its not worth staying here.

Business costs have to come way down here especially energy costs as all these industries are all heavy heavy users.

sovtek

jhegarty wrote: »

Our low corporation tax is the only reason for most of the multinationals are here.

Increasing it is the last thing the government should do.

That's the Third World economic model.

sovtek

Darragh29 wrote: »

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.

Darragh I see what your saying but you are going to get alot more of what you have already been getting in this forum.
This country has been sold the snake oil of the Chicago School economic model for so long that many can see no other way.
Until that changes Ireland will continue to operate as a third world economy.
Thats besides the fact that lowering wages and cutting jobs whilst leaving the wealthy to their wealth will continue to cause the economy to contract more and more.
There is a lot of money in this country floating around. The problem is only a relative few people have it. If the government wanted to it could protect jobs even if it had to take over the infrastructure that we payed for but the MNC's got to use all these years.
They could also bail us out (the PAYE worker) to the tune of borrowed billions instead of a few bankers/builders that would actually save the economy unlike what they are doing now.

sovtek

ongarite wrote: »

Totally with whatisayis. Dunno where the impression that MNC are rolling in money in Ireland and "can take" tax increase for the good of the country.

I can tell you that Micheal O'Dell has a HUGE house in Austin, Texas and Pfizer is billions in the black.
Even it's investors are pissed off about them cutting jobs. One took out adds in America slaying Pfizer for laying 8000 people off worldwide (see even if tax is low they will still piss off) while they are still making huge profits.

sovtek

cm2000 wrote: »

normal profits are a part of normal costs and that analysis is irrelevant anyway. It makes it more expensive for them to be here, thats the key. We need to be lowering costs for business. we need to make Ireland more competitive. that is vital.

I thought the idea of competition was for companies to compete for consumers business not for countries to compete for businesses.

cm2000

sovtek wrote: »

I thought the idea of competition was for companies to compete for consumers business not for countries to compete for businesses.

This would be true many years ago but you have to examine it in the context of a global environment. The reason countries must compete for business is that it is now relatively easy for a large scale MNC to shift production to another more cost effective country. The EU means that any MNC operating here has a guaranteed market of 500m+, the Irish consumer market place is not the key for them to be here. We need them, not as a supplier of goods to us but as a means for us to boost our exports.

FlutterinBantam

Darragh29 wrote: »

This country is much larger than the multinationals. We can't be pandering to big business to the detriment of the whole economy.

heheh heh unfortunately it's not.

the_syco

Darragh29 wrote: »

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%???

Not as bad as what the shinners wanted but at teh current level, Dell have left. We push up the corpo tax, in the short term the coffers may get some money, in the long term, they may see Poland as a cheaper option.

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.

The Intel fabs won't be making any new chips, so once they go off the production line, it'll be cheaper building a fab from the ground up than refurbing an old one.

=-=

If Intel, HP, Wyeth, etc left, we'd not only have a few extra thousand to the registar, but also be short a few million in tax. Losing 10%-12% is worse than not gaining 3%-5%, to get that 15%.

The Rooster

Increasing the corporation tax rate would result in a reduction in the total CT tax take. MNCs would change their models, which currently have most of their profits for Europe being located in Ireland.

A very very silly idea.

There is nobody going around in big cars because of the CT rate being low.
Any money that individuals get from companies has to go through the income tax or PAYE system.
There are lots of people in jobs because the CT rate is low.

Darragh29

The Rooster wrote: »

Increasing the corporation tax rate would result in a reduction in the total CT tax take. MNCs would change their models, which currently have most of their profits for Europe being located in Ireland.

A very very silly idea.

There is nobody going around in big cars because of the CT rate being low.
Any money that individuals get from companies has to go through the income tax or PAYE system.
There are lots of people in jobs because the CT rate is low.

My point is that if the CT rate is 13.5%, it is still extremely low!!! There is room for movement here!

Darragh29

We have allowed vested interests in this country to put us into a corner. And we are continuing to pursue this policy by allowing big business interests to put the frighteners on us in relation to our CT rate. We have to be assertive here and say that we control the tax rates in this country.

yoshytoshy

We don't have any natural resources to supply industrial companies ,all we have is low corporate taxes.

Germany for instance has a supply of steel etc ,so they can afford to raise the tax for manufacturing.

bk

Darragh29 wrote: »

My point is that if the CT rate is 13.5%, it is still extremely low!!! There is room for movement here!

No there is not.

Many US and UK companies funnel literally Billions of Euro of their profits through Ireland because of the low tax rate. This is purely an accounting instrument in order to reduce their tax burden, there is little or no staff or infrastructure involved, usually just a few lawyers and accountants.

They do this purely for the low tax rate, if we increased the CT rate, they could pull out literally overnight and we would lose hundreds of millions of revenue.

An example of this is Ireland most profitable company, Round Island One. Ever hear of it, it is a subsidiary of Microsoft, which manages about €16 billion of their licences and earns over €3.5 Billion profit every year. It has a very small staff.

Another unit of Boston Scientific Inc earned €475 million in profit and only has one employee!!

Basically these are only shell companies and they and their money would disappear overnight if we increased the CT rate.

Nevermind the longer term effect it would have on other MNC's who do employ lots of people pulling out in time.

Basically your suggestion would lead to us making less from CT, not more and losing even more jobs. Very foolish.

ongarite

Darragh29 wrote: »

My point is that if the CT rate is 13.5%, it is still extremely low!!! There is room for movement here!

No there is not. CT tax take is already down 35% compared to January 2008. By increasing CT you would force the hand of many MNC and they would just cut even more jobs and close plants.
We should be cutting CT even more if possible to encourage those MNC who are here to stay and encourage more to come here.