Ireland and the Euro

Rattle

Reuters have an article up about Sarkozy discussing the likelihood in future of a two-tier Europe, and the possibility of member states leaving the eurozone.
http://www.reuters.com/article/2011/11/09/us-eurozone-future-sarkozy-idUSTRE7A85VV20111109

He says the core monetary union would have closer integration on taxation and fiscal policy.

If this goes beyond talk it looks to me like Ireland will have a choice between lower corporation tax or core eurozone membership - thats if we get a choice. Outside the eurozone I think it likely we would end up in some way linked to sterling, I can't imagine a return to the punt would be a good experience.

Any other opinions on this?

ei.sdraob

Ok so we have Euro North (DE,NL,FR?)
and Euro South (everyone else)
Joining the more exclusive club would mean loss of taxation control (NO!) and would endup in stronger currency with which would hurt exports which is the only thing that may get this economy out of a hole somewhat
The choice is a nobrainer, let the Germans have their neuMark and let the French tag along as they have always done, the rest of the world would move one and peace would be restored to the galaxy and all that


edit:

In Sarkozy’s vision, the euro zone would rapidly deepen its integration, including in sensitive areas such as corporate and personal taxation, while the remainder of the EU would be left as a “confederation,” possibly expanding from 27 to 35 in the coming decade, with enlargement to the Balkans and beyond.

Yay I even made a flag for our future "southern" state Confederacy

ashleey

I think the reference to the Balkans should be most worrying. Currency blocs have never broken up peacefully. It seems like the Germans are weighing up what would be the lesser expense? Breakup or bailout?
On a positive note the us will still be attracted to Ireland as an 'Anglo Saxon ' type economy. Sarkozy should be careful for what he wishes.

Boskowski

What's the obsession with corporation tax anyway? Every time someone says 'Euro' the next guy cries 'corporation tax'. Is this actually a good thing that megabillion multinationals pay - what was the headline today - 4% tax? Profit über alles?
There are so many questions this kind of knee jerk reaction brings up in me but one sticks out. Are we rrally thinking that our only hope of financial survival is engaging in this race to the bottom pondering to every whim of the markets and the big corporates? Are we really thinking we get more loyalty of the markets and the sociopathic corporates than we'd get from advancing a political union which has - of nothing else - kept peace in Europe for the longest spell ever?

Chucky the tree

Boskowski wrote: »

What's the obsession with corporation tax anyway? Every time someone says 'Euro' the next guy cries 'corporation tax'. Is this actually a good thing that megabillion multinationals pay - what was the headline today - 4% tax? Profit über alles?
There are so many questions this kind of knee jerk reaction brings up in me but one sticks out. Are we rrally thinking that our only hope of financial survival is engaging in this race to the bottom pondering to every whim of the markets and the big corporates? Are we really thinking we get more loyalty of the markets and the sociopathic corporates than we'd get from advancing a political union which has - of nothing else - kept peace in Europe for the longest spell ever?

When they employ so many people then yes it is.

Debunker

If Ireland changed currency, it'd cost us a fair bit, right? Then again if the euro implodes then... I'm not sure what could happen actually.
If we stick to the Euro then there's no need to fret. (I hope)

Bannasidhe

Chucky the tree wrote: »

When they employ so many people then yes it is.

Employ until they get a better offer elsewhere. Our corporate tax rate didn't stop Dell, Talk Talk, Aviva from packing up and moving on when it suited their purpose.

Now before any one wants to accuse me of anti-capitalism left-wing yada yada let me just say that the purpose of multi-nationals is to make profits for their shareholders - and I have no issue with that - unless they seek to increase their margins by exploitation of workers including using child labour.

Their loyalty is therefore to their shareholders - again - that is as it should be. BUT it would be the height of folly (IMHO) to place all our hope for recovery eggs in the multinational basket - simply because they can and do move according to market conditions. Should the numbers prove beneficial Google etc would be off to India, Poland, wherever offers them the best financial advantage. They have no loyalty to Ireland - and why should they? Ireland simply currently offers them the best option.
By all means we should be seeking to attract foreign investment - but we also need indigenous industries who cannot simply pack up and move to form our bedrock.
Our agri-business/food sector is a perfect example of this - these are the areas where we should be concentrating. The Common agricultural policy has, I believe, been as absolute disaster for Irish farming. The likes of Tescos squeezing the suppliers who in turn squeeze the producers arn't helping much either.

As for the Euro - I honestly don't see how it can survive as things currently stand. There were pros and cons for it, but the whole thing was rushed into and badly thought out. 17 countries each with their own agendas are now faced with taking collective emergency action but none of them want to concede a millimetre (apart from Ireland which has not only bent over but is paying retail for the lube) and all are desperate to protect their own national interests.

If the Euro does collapse - what are the options for Ireland? I imagine the debts would follow us so we would be starting off with a new currency while financially up the proverbial creek without a paddle.
Do we 'revive' the Punt? If we do that - do we tie it to Sterling as they are our biggest market or have it as a stand alone currency?
If it was the linked to Sterling route -How do we actually do that?
Would we be able to devalue or would we be at the tender mercies of the Bank of England to a great extent?
Would there be any value left in it to devalue or would it be like the Drachma/Lira in pre-Euro days when it was seemingly endless 0000000's on the notes?
Do we perhaps mimic Scotland and have Sterling but print our own notes (oh Lord - the Shinners would FREAK!)?

thebman

Bannasidhe wrote: »

Employ until they get a better offer elsewhere. Our corporate tax rate didn't stop Dell, Talk Talk, Aviva from packing up and moving on when it suited their purpose.

Now before any one wants to accuse me of anti-capitalism left-wing yada yada let me just say that the purpose of multi-nationals is to make profits for their shareholders - and I have no issue with that - unless they seek to increase their margins by exploitation of workers including using child labour.

Their loyalty is therefore to their shareholders - again - that is as it should be. BUT it would be the height of folly (IMHO) to place all our hope for recovery eggs in the multinational basket - simply because they can and do move according to market conditions. Should the numbers prove beneficial Google etc would be off to India, Poland, wherever offers them the best financial advantage. They have no loyalty to Ireland - and why should they? Ireland simply currently offers them the best option.
By all means we should be seeking to attract foreign investment - but we also need indigenous industries who cannot simply pack up and move to form our bedrock.
Our agri-business/food sector is a perfect example of this - this is where we should be concentrating.

The problem with Irish indigenous industries is they usually get bought out by British or US companies if they are successful. Not sure how we can stop that.

Bannasidhe

thebman wrote: »

The problem with Irish indigenous industries is they usually get bought out by British or US companies if they are successful. Not sure how we can stop that.

It is a problem. Even Tayto is now, as far as I remember, owned by Canadians. Perhaps tax incentives á la those we have in place for multinational corporations but aimed at Irish owned ones?
Or some law which states non-Irish cannot own more then a certain percentage? I know in Italy (bad example of an economy but one I have personal knowledge of) a non-Italian cannot own more then 80% of a factory in Italy.

I do remember when I lived in Oz a local entrepreneur named Dick Smith (he made millions with electrical stores which were a cross between Harvey Normans and Maplins) was incensed by the fact that Australia imported all its matches - main brand was named Red Heads - so he funded an indigenous match making industry - the matches were called Dick Heads .
He also went into the dairy industry and had Dick Cheese after the largest cheese manufacturer was bought by non-Australians. Sadly, I cannot report of the success or failure of these Dick products....

femur61

Chucky the tree wrote: »

When they employ so many people then yes it is.

Companies aren't coming here because of the low corporation tax but because its a way of evading tax. From what I understand large companies like Google channel their money via Ireland to Bermuda. This is becoming widely known actually they are doing nothing illegal. Since a lot ot MNC are American, and the Americans want their taxes they are looking for loop holes. It has been reported on Bloomberg and on the UK news channels.

Dell has moved., Intel, and our low coporation tax did nothing to keep them here.

Rattle

Bannasidhe wrote: »

Employ until they get a better offer elsewhere. Our corporate tax rate didn't stop Dell, Talk Talk, Aviva from packing up and moving on when it suited their purpose.
...
BUT it would be the height of folly (IMHO) to place all our hope for recovery eggs in the multinational basket - simply because they can and do move according to market conditions. Should the numbers prove beneficial Google etc would be off to India, Poland, wherever offers them the best financial advantage. They have no loyalty to Ireland - and why should they? Ireland simply currently offers them the best option.

Yes, and being part of the eurozone is a part of why they are here, so if we decide to appease the multinationals rather than Europe they could end up going anyway. There are other low tax markets.

I just highlighted corporation tax as I think the mention of tax harmonisation had Ireland in mind. The bigger issue for me is the more general loss of sovereignty.

Do we perhaps mimic Scotland and have Sterling but print our own notes (oh Lord - the Shinners would FREAK!)?

I hope not, but think this is one of the more likely scenarios.

ashleey

And how much of the glowing GDP figures is actually 'royalty' payments by google et al doing the double Irish and the Dutch sandwich?

Chucky the tree

Bannasidhe wrote: »

Employ until they get a better offer elsewhere. Our corporate tax rate didn't stop Dell, Talk Talk, Aviva from packing up and moving on when it suited their purpose.

Now before any one wants to accuse me of anti-capitalism left-wing yada yada let me just say that the purpose of multi-nationals is to make profits for their shareholders - and I have no issue with that - unless they seek to increase their margins by exploitation of workers including using child labour.

Their loyalty is therefore to their shareholders - again - that is as it should be. BUT it would be the height of folly (IMHO) to place all our hope for recovery eggs in the multinational basket - simply because they can and do move according to market conditions. Should the numbers prove beneficial Google etc would be off to India, Poland, wherever offers them the best financial advantage. They have no loyalty to Ireland - and why should they? Ireland simply currently offers them the best option.
By all means we should be seeking to attract foreign investment - but we also need indigenous industries who cannot simply pack up and move to form our bedrock.

It might not be perfect but it is what's keep us afloat at the moment. Irish indigenous industries would come close to picking up the slack of the number of unemployed people who'd be left if all the major multinationals left. If anything we should have considered dropping our CT to 0% if it meant keeping the Dell, Aviva and Talk talk jobs.

irishh_bob

femur61 wrote: »

Companies aren't coming here because of the low corporation tax but because its a way of evading tax. From what I understand large companies like Google channel their money via Ireland to Bermuda. This is becoming widely known actually they are doing nothing illegal. Since a lot ot MNC are American, and the Americans want their taxes they are looking for loop holes. It has been reported on Bloomberg and on the UK news channels.

Dell has moved., Intel, and our low coporation tax did nothing to keep them here.

they left because of our high wage levels , leaving the euro would dramatically change this

Atilathehun

femur61 wrote: »

Companies aren't coming here because of the low corporation tax but because its a way of evading tax. From what I understand large companies like Google channel their money via Ireland to Bermuda. This is becoming widely known actually they are doing nothing illegal. Since a lot ot MNC are American, and the Americans want their taxes they are looking for loop holes. It has been reported on Bloomberg and on the UK news channels.

Dell has moved., Intel, and our low coporation tax did nothing to keep them here.

Dell manufacturing has moved, for lower assembly labour rates elsewhere. The real high value part of it's business in Ireland, has in fact expanded.

PS. Informed sources tell me, the move to Poland, has not been without it's downside;) The plant over there, not getting anywhere the productivity levels of the old Limerick plant. Watch this space:)

antoobrien

Chucky the tree wrote: »

It might not be perfect but it is what's keep us afloat at the moment. Irish indigenous industries would come close to picking up the slack of the number of unemployed people who'd be left if all the major multinationals left. If anything we should have considered dropping our CT to 0% if it meant keeping the Dell, Aviva and Talk talk jobs.

Considering CT brought in €3.9 billion (out of €34.4 billion) last year - no that's not a good idea. The companies that are leaving are leaving because they can get the bodies cheaper elsewhere.

Nothingbetter2d

what currency does china use?

we buy everything from china anyways so we may as well just adopt the chinese currency

mistermouse

I wish European nations would be honest in their opposition to our Corporation tax rates. They want it raised so their states will be in with a better shout and getting the Multi Nationals jobs and investment, nothing else.

It has nothing to do with the Euro, people here aren't linking it to the current crisis, before the crisis France etc were complaining that we had an unfair advantage. The just see our bailout as a way of getting their way on something they have been looking for, for a long time.

So no we do not always mention Corporation tax every time the 'Euro' comes up, the Europeans started doing that for their own ends.