Do as France says, not as France does
The truth will out and when it does, you knew it all along
Blogs | 21 Mar 2011 :
The Irish Times reports this morning
that papers supplied to it by the French equivalent of the IDA, the Agency for International Investment, indicate that the effective rate of corporate tax in France is 8.2%, not the 33.33% of the headline rate.
This rate is due to a number of very generous reductions available to countries for a number of conditions such as hiring older workers, setting up in a disadvantaged area, or engaging in research. The research reduction is thought to be one of the most generous available, coming in at a staggering 30%!
Now, while the IDA here is equipped with such weapons in its arsenal to attract foreign direct investment, France's recent position in browbeating Ireland for its corporate tax rate rings distinctly hollow now in light of these confirmations. I say confirmations, as opposed to revelations, as these measures, if not their exact figures, had been reported to us here in ComputerScope Towers by various players, both inside and beyond the ICT industry.
Now, while all this is public knowledge, and freely, if not immediately available, one must assume that Mr Sarkozy knew this would out. So, the question remains, if he knew this would come out and undermine his arguments for Ireland changing its tax rate, why would he have insisted on making such a vociferous argument in the first place?
Is France perhaps smarting from some loss in attracting a particular company? Or is it more the death from a thousand cuts effect where some small loss tipped it over into bluster and rage?
I suspect that what we are seeing is merely the tip of the iceberg and that there are deep machinations beneath that are driving the agenda for Sarkozy.
That said, I stand by my assertions that the new Irish Government ought not to change significantly the corporate tax rate, but should most certainly close the loopholes that exist which allow even our modest 12.5% to be significantly reduced. A caveat that says all available reductions shall not cumulatively exceed more than 30% of total tax payable would go a long way towards filling the coffers without actually driving away the businesses, especially in the ICT sector, that have been such a support to Ireland's economic viability.