Wednesday 20 September 2017

Trump's new commerce secretary vows to lower corporation tax in bid to attract multinationals back to US

Wall Street tycoon Wilbur Ross. Photo: Bloomberg
Wall Street tycoon Wilbur Ross. Photo: Bloomberg

Sean Duffy

Donald Trump's choice to be the new US Commerce Secretary, Wilbur Ross, has said that lowering corporation tax in the US will be a top priority for luring multinationals to the country.

In testimony that will send a shudder down the spine of Irish policymakers, Mr Ross told a US Senate Confirmation Committeee that lowering the current rate of tax on multinationals would be the "the biggest single tool" the US could use to attract and keep large corporates.

"The best way for foreign firms to come here is for us to lower the corporate tax rate.That will be a further inducement for them to come. Right now we are not competitive with our marginal tax rate against many other countries with whom we compete," Mr Ross said.

"Take for example Mexico: The corporate tax rate there is about half of what it is in our countries, and that’s true of in many of the other countries," Mr Ross told the Senate committee.

Mr Ross has a long history with Ireland, having previously invested in the country’s financial sector at the height of the recession.

He purchased shares in struggling Irish lender Bank of Ireland (BOI) at a time when few international investors would contemplate investing in Irish bank stocks.

Mr Ross’s intervention with BOI is credited with having boosted confidence in the Irish banking sector at a critical time for the financial sector here. BOI was one of  the only Irish pillar banks  that wasn’t nationalised in the wake of the bank guarantee.

He sold his shares in Bank of Ireland in 2014, recouping an estimated $400m profit in the process. Currently, Mr Ross is invested in the Irish property market through his WLR Cardinal vehicle which provides loans to developers. WLR Cardinal is parly backed by the Irish Strategic Investment Fund.

However, Mr Ross’' intervention on the issue on corporation tax will have done little to soothe the concerns of Irish policymakers who are attempting to chart a course for the country’s economy against a the backdrop of myriad external challenges.

Mr Ross also raised the prospect of further confrontation with China, which has been brewing since Mr Trump’s inauguration.

He stated that China had the most protectionist of the world’s major economies and vowed to level the playing field with the Chinese on trade, especially in reducing overcapacity in its steel industry.

"China is the most protectionist country of very large countries..They have both very high tariff barriers and very high non-tariff trade barriers. So they talk much more about free trade than they actually practice," he said.

Online Editors

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