Ireland’s second-largest opposition party has supported a “small increase” in the country’s corporate tax rate, in a sign that Dublin’s political consensus on multinationals is broken after the G7 agreed to a plan for global tax reform.
The main tax rate of 12.5 per cent in Ireland has been central to its success in attracting multinational companies for several years. But Dublin now faces a significant challenge after the G7 group of first-rate nations approved a global minimum wage of 15 per cent.
Ged Nash, spokesman for the finance of the Irish Labor party, told the Financial Times that he was calling for a “national conversation” for potential growth.
“It simply came to our notice then [in Ireland’s corporate tax rate] it’s something I think we can live with, ”Nash said. He added that while“ we’re not even close to that ”because the OECD hasn’t even accepted a global agreement“ the first thing we need to do is start building a consensus here in Ireland politically ”.
Nash said he would raise the issue with Irish finance minister Paschal Donohoe in parliament next week.
“The minister needs to deal with parliament on what the options are for Ireland,” Nash said. He added that the opposition should receive enough information to weigh the pros and cons of raising Ireland’s corporate rate to the world minimum or defending the existing tax that all political parties have long supported.
If a global agreement is reached at a higher rate than the current budget of Ireland and Dublin chooses not to implement, other countries could then recover the remaining tax revenues, according to the plan under discussion. It would be politically untenable in Ireland, some observers have observed.
Ireland collects almost 12 billion euros a year in corporate tax, out of a total tax revenue of about 57 billion euros. In a report published last month, the Dublin Institute for Economic and Social Research warned that higher tax rates could hurt Irish small and medium-sized enterprises, which employ about two-thirds of the country’s workers.
“The 12.5 per cent tax rate has become almost an item of faith in Irish politics,” said Gary Murphy, head of the law and government school at Dublin City University. Even Sinn Féin – the largest opposition party and the far left – has been careful to elevate it, he said.
But on Tuesday, Pearse Doherty, a spokesman for Sinn Féin’s finances, told the FT that while he “did not support” Ireland’s tax rate increase, he had asked the Department of Finance a detailed analysis on whether it would be “beneficial” for Ireland to adopt a 15 per cent rate only for multinationals and whether such a measure would be possible.
He also wanted to see simulations on raising the corporate tax rate “overall” and keeping it at 12.5 percent, he said: “We need to go into this. [international negotiation] with open eyes. “
Speaking after the G7 meeting on Saturday, Donohoe told reporters he will continue to “make the case for legitimate tax competition.”
An Irish government official told the FT that while Dublin wanted to defend the 12.5 per cent rate, it could be “difficult for Ireland to resist” by raising it if the US pursued the 15 per cent minimum. world.
The Irish Department of Finance estimates that Dublin could lose € 2 billion a year from corporate tax reform, although Donohoe insisted on Saturday that the potential cost was already integrated into forecasts. economic development of Ireland. The department declined to comment, other than to refer to the minister’s statement.
Discussions continue between 139 countries at the OECD in Paris, with the aim of reaching an agreement later this year.