What European bosses really think of Ireland
Europe's business chiefs say we need to hike our tax
Published 12/06/2011 | 05:00
AFTER attempts to secure a reduction in the bailout interest rate were rebuffed, Ireland's stock isn't very high in Europe. And things are getting worse. We've heard from the bickering politicians, but what about the people who really matter -- the heads of some of Europe's top businesses. Are we moaning too much about our rough treatment by Europe, or should we hike up our corporation tax and just get on with it? And what about default?
Lorenzo Pellicioli Chief executive officer De Agostini Group
"I believe that Ireland should increase both corporate and personal income tax rates. Tax harmonisation is one of the pillars on which Europe should build its future," says Pellicioli, who runs one of Italy's largest holding companies, with stakes in banking, media, gaming and other sectors.
"I am not in a position to criticise the measures and the strategy of the Irish Government. I am convinced that the protection of the Irish citizens' interests is the Government's priority and the Irish Government will find the appropriate way to serve them.
"Europe, for its part, has to recognise that measures needed to meet the financial targets must have a sustainable, although heavy, social cost. I feel that we are now in the middle of a negotiation that will have to lead to a proper balance."
Pellicioli believes that default "is something that should be avoided, although debt rescheduling or other measures might have to be taken in order for Ireland's debt to remain investable".
Chief executive officer of Vueling Airlines
"A 12.5 per cent corporate tax bracket was a great incentive to attract foreign corporations to set up shop in Ireland back in the day, but perhaps it's not such a good idea when the priority is to fill the treasury's depleted coffers. Raising the bar somewhere around 20-22 per cent would put Ireland in the middle of a comparable set of countries and still be competitive," according to Cruz, who runs low-cost carrier Vueling. "Besides, there's less leeway as regards personal income tax or VAT."
Cruz points to the experience of Spain. "Tough reforms have been implemented and more will be required. It is human nature to blame the pain on someone else. In truth, a degree of the severity of the measures taken probably was intended to appease 'external agents'," he said.
"But as a country, as a society, we do need to complain a little less and reflect a little more on our past mistakes and excesses. If not, we're not going to build a future on a new, better and more sustainable economic model," he said.
Cruz does not believe Ireland or the other bailed-out countries should leave the euro. "I think the first question we need to ask as is, do we want to save the Union? If countries start peeling off now, chances are more will follow for similar or different reasons -- financial, trade-related or even political. Obviously the distressed countries must agree to comply with strict, but fair, conditions to get their houses in order. But the big boys need to see beyond the next electoral cycle and live up to their responsibilities. Sometimes I think history is testing Europe and Europe is not showing up at the exam."
Chief executive WPP
"We believe it is important for all countries to have a stable corporate tax regime, to provide clarity and reduce uncertainty, particularly when countries want to encourage inward investment," according to Sorrell who heads up the €25bn advertising and media giant WPP.
"Ireland has attracted and retained significant foreign investment from overseas groups and any increase to the corporate tax rate could damage this."
Sorrell believes that the Government is on track to meet the IMF targets and is wary of default. He also believes that suggestions that the euro may break up are unlikely. "I understand that the Irish Government has publicly ruled out leaving the euro, and we believe it is reasonable to assume that all these countries will remain in the eurozone."
Munich Re Chief Financial Officer
"We cannot and will not make separate assessments of measures taken by individual countries to overcome the financial crisis. But we can say this much -- we support any measures designed to bring the financial and debt crisis under control in the long term and to contribute towards normalising the markets," according to Schneider, one of the top executives at the €19bn German financial giant.
"The consistent approach adopted by the EU, the central banks and the IMF as well as the measures triggered in the countries covered by the rescue fund are right and important.
"I would like to stress that for me the euro and the countries that make up the eurozone are not a matter for discussion.
"There is no alternative to the euro, which is decisive for Europe's future. It has been an economic boon to all the member states.
"Therefore, we should not simply sulk in the corner and bemoan the mistakes of the past. Instead, we have to learn the right lessons from the crisis and correct any past mistakes. This includes, for example, ensuring that in future private creditors take a greater share of the risk."
CEO Whitestar financial services
"The corporate tax rate in Ireland has to increase if your country is to have any chance of getting the deficit back to the eurozone's limit of 3 per cent by 2014.
"Ireland is a small country with roughly 4.5m inhabitants and an increase in corporate tax would certainly support it achieving targets, as increasing other taxes and cost-cutting alone can't make up the difference," according to Calvao, who runs the Portuguese financial services group Whitestar. "Although we understand the importance of corporation tax levels in Ireland, some upward adjustment would be an important political signal to the EU."
Calvao warns that if Ireland was to default, it could become less attractive to investors.
"It's also clear that the reputation and risk perception of Ireland has been affected. A debt restructuring, or a default, would risk making such countries not attractive for investors."
Sunday Indo Business