When making haste slowly is a good start
Published 08/04/2014 | 02:30
SOMETIMES we become indifferent to danger because "wolf" has been cried too many times.
Readers could be forgiven for greeting another warning about threats to our corporation tax with a yawn.
We have all heard too many times that foreign governments want to force Ireland to tax multinationals here more aggressively. Some ministers have made a living out of defending our 12.5pc corporate tax rate against imaginary threats from Europe.
Today, the real threat to our corporate tax rate comes from Washington and Paris rather than Brussels, but the danger remains very real.
The Government knows this. It was shaken to its core by the hearings in the US Senate last year, which saw bipartisan criticism of our tax regime.
It is also worried about the OECD's base erosion and profit shifting project, which is looking at ways to make international taxation fairer. Last year, the Government scrambled to come up with a credible rebuttal to the US senators but produced nothing more than meaningless assertions. Yesterday's publication of a technical paper on effective rates of corporation tax is the first real attempt to give some intellectual underpinnings to those assertions.
Whether it is enough remains to be seen. The Government's defence runs something like this: these matters are terribly complex and you cannot compare apples with oranges. There is much truth in this; tax systems vary enormously across jurisdictions.
If US politicians decide that they don't like the Irish system, they can make a few changes to the tax code there that will have devastating long-term consequences for this country. The technical paper published yesterday is a credible beginning to a campaign to resist such changes but it is only a beginning.