Fianna Fáil Finance Spokesperson, Michael McGrath TD has said the moves by President Trump to cut the US corporate tax rate to within 2.5% of Ireland’s from 35% to 15% represents a significant challenge to Ireland’s economic model.
“This mooted cut, which will require approval from the US Congress, will see one of Ireland’s strongest selling points for foreign direct investment from US companies being put under pressure.
“The UK Government has reduced its corporate tax in the recent past and has committed to reducing it further to 17% by 2020 all at a time when continued pressure is being applied on Ireland from certain elements in the EU.
“While the Trump administration’s proposals are a long way off from becoming a reality, the Government must re-emphasise our opposition to any challenge to our corporate tax rate or our tax sovereignty from Europe or anywhere else.
“It is to be welcomed that the Trump administration seems to have moved away from a ‘border adjustment tax’ which would have seen taxes on Irish and European exports to the US.
“The Government need to assess how this may affect our tax base. 14% of our total tax take came from corporate tax in 2016, with a large part of that amount coming from a small number of US companies located in Ireland and any hit to this may drastically impact our ability to fund vital public services.
“While our transparent, and low, corporate tax rate is certainly attractive to foreign companies, it’s not the only reason they locate here.
“Our highly skilled and educated workforce, our proficiency in the English language, and EU membership all make Ireland a strong place to invest in.
“However, in recent years, our competitiveness has been put under the spot light. Ireland is currently only ranked 23rd in the World Economic Forum Global Competitiveness Report and 18th in the World Bank’s Ease of Doing Business Index.
“The cost of doing business in Ireland is still too high, and would make US companies less likely to locate here if the US drops its corporate tax rates.
“Our tax system must be reformed to encourage enterprise and the significant deficits in terms of transport, higher education, housing, health and childcare must be addressed through a long term capital investment programmme.
“Ireland is an attractive place to do business but we must prepare for all eventualities, including a drop in US corporate tax rates and we must work to improve our competitiveness,” concluded Deputy McGrath.