A chara, – David Murphy (Letters, September 13th) takes issue with my argument that we should await the decisions of the US Congress on the final shape of corporate tax reform before implementing whatever rates and regulations are finally agreed at OECD level.
He rightfully notes that any increased tax revenues accruing to the countries in which multinational companies operate could be well spent on healthcare and other social services. However, the reforms he advocates are already taking place and we are merely debating the details of what and how further corporate tax reforms are agreed. Irish corporate tax revenues have increased by 250 per cent since 2014 and August receipts set another record high. The infamous “Double Irish” corporate tax loophole has been closed, and the “knowledge development box” scheme which replaced it is compliant with OECD guidelines.
There is nothing to prevent any country implementing a digital sales tax in its territory to increase their revenues and thereby reduce corporate profits taxable anywhere. Nothing, that is, except the outright opposition of the US government, which, under Donald Trump, threatened sanctions against France for proposing to do so. Whether we like it or not, the final shape of any global corporate tax reforms will be determined by whatever the Biden regime can get passed by Congress and agreed at OECD level.
It would be naive to believe a small country like Ireland will have a significant influence on the process, or that its primary aim will be to increase global tax equity and reduce global social inequality. The only reason the US Congress and Senate might be persuaded to vote through increases in corporate tax often payable by their main donors is if it increases the US tax take generally and reduces the amount of tax payable by most of its voters.
Ireland will then have no options but to row in behind whatever is agreed by the major powers at OECD level or risk sanctions that would put our foreign direct investment at risk. The OECD corporate tax reform process is due to conclude by the end of this year so, at most, any differences between Ireland and our EU partners is a matter of timing.
Many will not be entirely happy with the outcome as it will have been decided by the main global powers in their own interests, and the degree to which they can withstand the lobbying power of global corporations. But the reality is that we are rule-takers in this instance and will simply have to make the best of whatever new arrangements apply.
Hopefully, whatever is finally agreed will be a step forward in terms of global tax equity and reduced global social inequality, but just as in the case of climate change, we cannot solve these problems on our own. – Yours, etc,
FRANK SCHNITTGER,
Blessington,
Co Wicklow.