The Taoiseach has insisted that Ireland’s 12.5% corporation tax rate is not the country’s “unique selling point”.
In the Dáil on Tuesday, Micheal Martin rejected suggestions that his Government lacked a strategy to attract foreign direct investment if the country’s corporate tax rate increased in line with an Organisation for Economic Co-operation and Development (OECD) deal.
Ireland is one of just nine countries not to have signed up to the deal, and is reluctant to give up its highly prized 12.5% rate, but has come under increasing international pressure to do so.
Under questioning in the Dáil from the Social Democrats co-leader Catherine Murphy about what Ireland’s foreign investment strategy would be if the country did sign up to a global agreement on tax – which could see the rate increasing to a possible 15% — Mr Martin rejected the idea Ireland had no other factors that could attract international firms.
“We all know change is coming with a global minimum corporate tax rate. There is an inevitability about this. Your own evolving language, and that of the Tanaiste and the Minister for Finance on this issue, suggests that you accept that change is coming too,” Ms Murphy told the Taoiseach.
Asking Mr Martin what Ireland’s unique selling point is, she accused the Government of failing to prepare for any change in the tax rate.
“Some countries attract foreign direct investment. Not only do they have a skilled workforce, but they have excellent public services, and they have an affordable cost of living. Ireland will not attract companies on that basis,” she said.
“Why would you go to a country where workers can’t afford a home, you can’t guarantee the lights staying on, when you can go elsewhere and not suffer a tax penalty for doing so?” she asked.
Mr Martin told the Dáil: “It’s not the unique selling point of attracting foreign direct investment into the country.”
He said that Ireland’s long-term investment in education and research, alongside membership of the EU, had made the country an attractive place to do business.
“Because repeatedly and consistently, companies that have located here, from Intel to the Eli Lilly, all over the country would say to you that the quality of the workforce here is second to none.”
Repeating comments he had made in recent says, Mr Martin said: “The reason we have not signed up is because of the lack of certainty in what has been proposed so far.”
“Because the key issue for those who invest in Ireland is they want certainty over the overall industrial policy framework, including tax.”
“They don’t want a situation that is going to change every two to three years.”
Both Tanaiste Leo Varadkar and Finance Minister Paschal Donohoe have said in recent says that Ireland is yet to make a decision on the issue, ahead of next month’s Budget.
Mr Donohoe said last week that negotiations and discussions with the OECD are continuing.