The IMF and Ireland's Corporation Tax



G

Gimpanzee

Now that the IMF are most likely coming in, will happen to our corporation tax rate? If it's increased just how buggered are we? Could this be the one area that, if tampered with, could destroy the economy irreparably (even more so that it is already, I mean)?
IMF don't give a rats ass about the corp tax rate. What ever works for us is good.. Can't see how the ECB would be too interesed in it either. For them the priority is us being able to get our house in order.

The EU on the otherhand...
 

Harmonica

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IMF don't give a rats ass about the corp tax rate. What ever works for us is good.. Can't see how the ECB would be too interesed in it either. For them the priority is us being able to get our house in order. .
I agree. There is no evidence in other countries they targeted. They cut costs mainly but would also target some tax increases or asset sales because that is what any business would do when threatened with bankruptcy.
 

Kevin Doyle

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I agree. There is no evidence in other countries they targeted. They cut costs mainly but would also target some tax increases or asset sales because that is what any business would do when threatened with bankruptcy.
You guys keep telling yourselves that, we will be tapping into the EU bail out fund, the IMFs control of the lending criteria under those circumstances is marginal, they are there for window dressing. It will be the European commission that ditates the terms of the loan and they will exact a price in terms of tax harmonisation across the board, as well as savage cuts in the order of what the budget contained anyway.

But you guys need to get this through your head, our CT rate is toast, least we leave the Euro and approach the IMF directly and independently and even then there are no guarantees that they might not recommend a slight nudge upwards.
 

Kevin Doyle

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So, how likely is a change in corporation tax from either the IMF, ECB or EU? Can the government refuse any changes?
IMF might ask for an increase, the EU will demand one.

The Government can refuse but the lights go out very soon after.
 

Limestone

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Foregtting (momentarily) what's gone before - I genuinely wish Lenihan the best in the negotations and I hope he gets a good deal for Ireland.
 

Berty

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Yes, I think they would run the country like as if it was granted "examinership"... only it would be more strict.

Re: Corporate tax - if this is increased it would be economic suicide for the state and I don't think the big multinationals would hang around.

I guess we will just have to wait and see but according to Brian Cowen in Leaders questions this morning he is still denying that bailout talks will take place notwithstanding the imminent arrival of the IMF!!

Again, it's hard to believe anything you hear these days. I guess the governement might justify their position of "not saying it as it is" because they are going in negotiations with the IMF and don't want to show their hand. But do states have the power to enter into negotiations with institutions like the IMF?
 

johnfás

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You guys keep telling yourselves that, we will be tapping into the EU bail out fund, the IMFs control of the lending criteria under those circumstances is marginal, they are there for window dressing. It will be the European commission that ditates the terms of the loan and they will exact a price in terms of tax harmonisation across the board, as well as savage cuts in the order of what the budget contained anyway.

But you guys need to get this through your head, our CT rate is toast, least we leave the Euro and approach the IMF directly and independently and even then there are no guarantees that they might not recommend a slight nudge upwards.
I disagree. Tax harmonisation, or anything like it, is a long way off. Ireland is but a small player in the overall European debate on tax harmonisation. There are numeerous other actors in the Community who are opposed to tax harmonisation which is to benefit Ireland in such negotiations.
 

slx

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The priority is that they resolve the economic / fiscal problems a.s.a.p.

If you tamper with the Irish low corporation tax regime, you would basically drive all the multinationals out of the market and make a bad problem a hundred times worse.

The key areas I would think would be looked at are :

1) Why so many workers are completely outside the tax net (or almost completely outside).

2) Making local Government self-financing i.e. by giving it tax raising powers either charged on income or against property.

3) Tax shelters - they'll have to be very heavily reationalised.

On the spending side:

1) QANGOS !!! We don't need most of them.

2) Privatising a lot of state services i.e. a lot of generic admin and IT can be outsourced.

3) Complete reform of the management of the public service to get costs down.

4) This is a huge one - housing. We need to look at how social housing works and end rent allowance. It's costing vast amounts of money per year and the cost is largely masquerading as HEALTH SPENDING as the budget is partially handled by the HSE.

5) Tidy up lines of command in health, education and welfare. There is far too much crossover, confusion and waste.

6) Perhaps look at re-organisation of education to get better value for money than the current multi-flavour school system approach.

7) Close low demand services e.g. small hospitals, schools etc and merge them with larger ones to get value for money.

There are LOADS of things that you would look at before you'd consider corporation tax.

It maybe a German political objective to seek tax harmonisation across the EU. But, if you think the problems that fiscal harmonisation have caused are bad, if you try to implement one tax policy you could have utter chaos and almost US-style revolution on your hands! The countries are simply not compatible with regard to tax and spending policies.
 

Berty

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Yes they will do all of that, much of which should have been already done.
 

neutral_lurker

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The priority is that they resolve the economic / fiscal problems a.s.a.p.

If you tamper with the Irish low corporation tax regime, you would basically drive all the multinationals out of the market and make a bad problem a hundred times worse.

The key areas I would think would be looked at are :

1) Why so many workers are completely outside the tax net (or almost completely outside).

2) Making local Government self-financing i.e. by giving it tax raising powers either charged on income or against property.

3) Tax shelters - they'll have to be very heavily reationalised.

On the spending side:

1) QANGOS !!! We don't need most of them.

2) Privatising a lot of state services i.e. a lot of generic admin and IT can be outsourced.

3) Complete reform of the management of the public service to get costs down.

4) This is a huge one - housing. We need to look at how social housing works and end rent allowance. It's costing vast amounts of money per year and the cost is largely masquerading as HEALTH SPENDING as the budget is partially handled by the HSE.

5) Tidy up lines of command in health, education and welfare. There is far too much crossover, confusion and waste.

6) Perhaps look at re-organisation of education to get better value for money than the current multi-flavour school system approach.

7) Close low demand services e.g. small hospitals, schools etc and merge them with larger ones to get value for money.

There are LOADS of things that you would look at before you'd consider corporation tax.

It maybe a German political objective to seek tax harmonisation across the EU. But, if you think the problems that fiscal harmonisation have caused are bad, if you try to implement one tax policy you could have utter chaos and almost US-style revolution on your hands! The countries are simply not compatible with regard to tax and spending policies.
Do they have an email address seriously - I think we the citizens should contact them directly and give our views as to what needs cut we know all the hidden expenses etc we are so used to having our wishes ignored in favour of developers bankers unions oaps etc that we nearly feel we don't have a say, this is a democracy we should be allowed to express an opinion.
 

neutral_lurker

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I disagree. Tax harmonisation, or anything like it, is a long way off. Ireland is but a small player in the overall European debate on tax harmonisation. There are numeerous other actors in the Community who are opposed to tax harmonisation which is to benefit Ireland in such negotiations.
I seem to recall when I was being cajoled to vote yes for jobs we were at the heart of Europe.petunia

Well ok we are at the heart of the damage.
 

Berty

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I have doubted for some time now that we are living within a democratic system at all, and only lately (probably because I am an optimist) have I been totally convinced of it.
 

lff12

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Now that the IMF are most likely coming in, what will happen to our corporation tax rate? If it is increased just how buggered will we be? Could this be the one area that, if tampered with, will destroy the economy irreparably (even more so than it already is)?
One of the agendas commonly pushed by the IMF is to increase openness and deregulation of international trade. Since low corporation tax encourages companies to move bases and registrations around, it promotes this objective, albeit at the expense of the domestic taxpayer in the country of origin.

David McWilliams suggests that about 25% of companies availing of Ireland's low rates have no real presence here aside from an accounting presence. Essentially this means that we get quite a large chunk of tax from those companies. On the other hand, it also means that 75% of the companies using Ireland for tax purposes also have a meaningful contribution through a level of employment created. And of course they will be nicely gouged for business rates and commercial rents, which probably offsets much of the benefit of low corp tax.

The real danger is that companies without a presence can move ad lib (and probably do), or that domestic laws in the US etc change to penalise US companies who change HQ for tax reasons in order to evade higher US rates, thus making it less attractive. Of course we've already done a fine job in making Ireland less attractive with high commercial property costs, rates, inflated wage demands and relative levels of job protection in law.
 

Sync

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There seems to be a constant misunderstanding about the IMF. Just because the people running Ireland's political and regulatory institutions are morons doesn't mean the people running the IMF are morons.

If they come in, they're not going to execute the same plan as they did in Argentina, no more than they did in Latvia. They're going to examine the situation and tailor their actions accordingly.

I think six's post is generally on the money for areas you start with, although I'd suspect welfare would be hit early on as well.

The idea that you'd be tasked with a project of helping an economy recover, then immediately take steps to cripple that economy is silly. These are not silly people.
 

Doodah

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The Dutch in particular are licking their lips in anticipation of the EU demand for Irish corporate tax increases.
You can be guaranteed they're already issuing invitations to the multinationals to relocate.
I guess we'll just have to wait for the British media to point it out because sure as hell the Irish media won't.
 

Old Irish

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Raising Corporation Tax would be the nail in the coffin!

Germany ups pressure on Ireland over business tax | Reuters

I can't stand all this talk about raising corporation tax. Intel are on the brink of announcing a new process in Ireland but all this talk of hiking up Corporation tax could end all of that. If Intel leave Ireland it would be terrible to say the least. Although Angela Merkel doesn't seem to think it will affect growth but what if it is the deciding factor in whether or not a company stays in this country or not? I'm not saying it is the deciding factor but I'd say it is a strong enough factor.
 

Tigris Celtica

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Raising Corporation Tax will almost certainly be one of the many prices we will have to pay to get the inevitable bail-out from Europe.
 

sport02

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Jeff Randell of sky news feels we may have to sacrifice it, and if not, well something else.
 


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