Wednesday 28 September 2016

Ireland is now a 'pariah state' over tax, says Corbyn insider

UK Labour party leader Jeremy Corbyn's adviser wants Irish corporate taxes hiked

Paul O'Donoghue

Published 18/10/2015 | 02:30

Richard Murphy is considered the architect behind Labour leader Jeremy Corbyn's economic policies
Richard Murphy is considered the architect behind Labour leader Jeremy Corbyn's economic policies

Ireland is viewed as a "pariah state" by the international community due its corporate taxation policies, according to the man behind many of Jeremy Corbyn's economic ideas.

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Economist Richard Murphy also said that Ireland should bring its corporate tax rate in line with the UK's, which is set to drop from 20pc to 18pc by 2020.

Mr Murphy, a chartered accountant and tax expert from Norfolk, is widely credited as the brains behind 'Corbynomics', Mr Corbyn's central platform of economic policies. He is an unofficial adviser to the UK Labour leader and has known him for about a decade.

Examples of Mr Murphy's ideas which have been adopted by Mr Corbyn include a commitment to clamp down on tax evasion and avoidance by multinationals and the so-called "people's quantitative easing", which would see the Bank of England print money for state spending.

Mr Murphy was named by International Tax Review as the seventh most important person in tax in 2013.

Speaking to the Sunday Independent ahead of his appearance at the Kilkenomics conference, the economics and comedy festival that takes place in Kilkenny on the first week of November, he said Ireland needs to re-evaluate its corporate taxation strategy.

"There is this almost sacred belief in the 12.5pc corporate rate in Ireland, it's like it is in the middle of the flag and it defines Ireland to the world," he said. "The argument that it will bring jobs is enough to feed the fear of giving up the rate, which I understand, but Ireland needs to fundamentally change its approach.

"It has existed as a pariah state. It is not as unpopular as Luxembourg or Switzerland, but more so than pretty much any other country."

He added: "No one believes companies locate in Ireland because of great employees, infrastructure etc. They just think of tax-dodging as the first, last and only reason."

He said there has been a shift in international opinion towards tax, with many now advocating that corporations pay a higher rate of tax. He pointed to the OECD's so-called Base Erosion and Profit Shifting (BEPS) project to tighten corporate tax rules.

"What if countries line up against Ireland? What if the UK wants profits that are taxed in Ireland taxed in the UK instead, what then?

"Ireland needs to look at how it can increase its tax yield. I would look to see how it can increase its effective tax rate," said Mr Murphy, adding: "The UK has said it will go to 18pc in 2020 and if Ireland wants a target it should look at moving towards where the UK will be."

However, a spokesman for the Department of Finance defended Ireland's corporate tax policies, saying: "Our corporation tax system is transparent and statute-based. To further enhance our transparency and to demonstrate Ireland's commitment to the BEPS process, the Finance Bill will provide for the introduction of country-by-country reporting, in line with the OECD recommendations. The Bill will be law by the end of the year."

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