The Flat Earth Society
Other Discussion Boards => Philosophy, Religion & Society => Topic started by: xasop on October 05, 2021, 07:32:53 PM
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So this is an interesting move. Just the other day, the Taoiseach said the Republic's 12.5% corporate tax wasn't its selling point, citing joining the EU as more important for the nation's economic growth.
Micheál Martin has told the Dáil that negotiations that would see corporation tax set at a minimum 15% are "not complete at all" and Ireland is seeking further clarification on the issue.
However, he claimed that our low corporate tax rate "on its own is no longer a unique selling point," adding: "It never was, actually."
Instead the Taoiseach has said that investment in education and our joining the European Union were among the "fundamental pillars" which have lured multi-national companies to Ireland.
Now indications are that the Irish are going to raise their corporate tax to the OECD minimum of 15%.
Ireland is expected to adopt a 15% minimum corporate tax rate after several months of negotiations with the Organisation for Economic Co-operation and Development (OECD).
Sources close to Irish Finance Minister Paschal Donohoe say the Irish government “need certainty around the rate”, and assurances that Ireland won’t be forced to increase it further.
Much of the discussion has centred on the language of the global agreement.
The Irish government has insisted on the removal of the term “at least” 15% with regard to the amount each country should charge. Dublin is demanding a guarantee that it won’t be forced to increase the amount at a later date.
While it’s not clear yet whether this has been removed, sources say the Irish are amenable to the updated text which the government received on Monday.
I find this surprising, although if it does not drive business out of Ireland, it could be a very positive step. The Republic has long had to limit its government spending due to the low tax income, and this could allow the government to invest more in housing and healthcare, two of the most important problems in Ireland today.
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15% is still 4% less than the UK, so there likely is no fear of losing tax base to them.
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??? What financial illiteracy is this?
Let's suppose that I own a big business. Thork Industries.
I'm going to take in £5bn profit this quarter. My shareholders don't want the government to get 1 penny from my company. That's viewed as a waste.
So I go to a bank and I borrow £5bn at 3% interest. I can now tell the government that I have loan repayments of £5bn and hence made £0 of taxable profit.
Job done. It doesn't matter if the tax rate is 12.5% or 25%. Corporations aren't paying it. You just pay 3% to the bank instead. In effect, the bank has the lowest tax rate and the bank is collecting all the taxes without the burden of having to pay for healthcare, education, an army etc.
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??? What financial illiteracy is this?
Let's suppose that I own a big business. Thork Industries.
I'm going to take in £5bn profit this quarter. My shareholders don't want the government to get 1 penny from my company. That's viewed as a waste.
So I go to a bank and I borrow £5bn at 3% interest. I can now tell the government that I have loan repayments of £5bn and hence made £0 of taxable profit.
Job done. It doesn't matter if the tax rate is 12.5% or 25%. Corporations aren't paying it. You just pay 3% to the bank instead. In effect, the bank has the lowest tax rate and the bank is collecting all the taxes without the burden of having to pay for healthcare, education, an army etc.
Unfortunately, you’re the illiterate one. A loan is a balance sheet item and only the interest payments might be deductible expenses.
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15% is still 4% less than the UK, so there likely is no fear of losing tax base to them.
Well, the UK is unappealing for businesses right now for other reasons, but the main argument against raising the tax rate is that it reduces the difference with other EU nations that can compete better in other areas. If most of your clients and suppliers are in Paris, Amsterdam and Frankfurt, doing business from Dublin incurs various costs and inconveniences — overseas shipping of supplies and products, business travel for meetings, and enticing potential recruits from the continent to relocate to a distant island with a chronic housing shortage, to name a few.
So, those who support a low tax rate in Ireland argue that the tax rate should not only be low, but low enough that the tax savings offset these costs. I'm not an economist and I can't predict what kind of impact raising the corporate tax rate will have, I just hope it works out for the best.
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For Ireland, a reduction in the corporate tax rate will be potentially unprofitable. Experts assume the loss of more than $ 2 billion from the country's budget. It was the potential losses that for a long time kept the government of the jurisdiction from an unambiguous answer to the proposal of the Organization for Economic Cooperation and Development regarding the rate of 15%. In Ireland, corporate tax was below the global level by almost ten percentage points. The global level was held at 23%. Therefore, to strengthen the country's position with taxes, people will have to make a paystub (https://www.paystubcreator.net/) .
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Tax rates are not comparable across countries. Tax regulation is incredibly complex and an apples-to-apples comparison is fundamentally impossible. Ireland could raise nominal rates to 50% and still end up being a tax haven with the right regulatory framework.