Business Irish

Wednesday 26 June 2019

Denouncing Ireland as a tax haven is as dated as calling it homophobic because of our past

Ireland's FDI success story has come under fire - yet again - from the other side of the Atlantic. Yet the remarkable turnaround in this country's fortunes is a win-win for workers here, multinationals in the United States and consumers around the world

Mark Redmond is CEO of the American Chamber of Commerce Ireland
Mark Redmond is CEO of the American Chamber of Commerce Ireland

Mark Redmond

The publication of an academic study on the taxation of multinationals last week attracted a lot of media attention on both sides of the Atlantic. An opinion piece in 'The New York Times' on June 16 posed the following question: "But if Ireland hasn't actually been attracting all that much real foreign investment, how do we explain the Celtic Tiger growth rates it had for a number of years?"

The writer answered his own question by saying the growth was fictitious and was the product of tax avoidance strategies.

An opinion piece in 'The Irish Times' on the same day quoted, with apparent approval, an Irish politician from 1956 who challenged Ireland's newly adopted, pro-multinational investment, low corporate tax policy because it would attract investments… likely to be of a "fugitive character".

If the above views reflected reality you would understandably assume that the top priority of the multinationals' leadership in Ireland was to safeguard "tax avoidance strategies" and that the general public was indifferent to their presence because not that much of it was "real" and its growth was "fictitious".

However, both assumptions would be wrong.

Independent public opinion research by iReach, carried out in the first week in June and commissioned by AmCham Ireland, found that 84pc of the general public believe that US multinationals' presence in this country is critical to Ireland's economic future.

A survey at the same time of the leadership of the Irish operations of US multinational companies found that their top priority was the availability of skills for the jobs available and planned, with the second priority being the availability of rented residential accommodation for their employees.

These top two priorities make it really clear that US multinationals are ambitious for growth in Ireland and the key enabler of that growth is not tax - it is people. And the Irish general public get this - seven out of 10 people believe that the quality of the workforce in Ireland is the main driver in attracting inward investment.

Consider the following - one third of the world's contact lenses are created in Ireland, so are four out of every five medical stents, saving lives around the world and one quarter of the world's diabetes patients depend on products created here.

Ireland is one of the world's leading providers of the most advanced computer processors and 'internet of things' technology.

The total value of US business investment in Ireland - ranging from data centres to the world's most advanced manufacturing facilities - stands at $387bn (€334bn) - this is more than the combined US investment in South America, Africa and the Middle East, and more than the BRIC countries combined.

All of the world's top 10 pharmaceutical companies have substantial operations in Ireland - in the past 10 years, investment in bio-pharmaceutical facilities here amounted to almost $10bn - the largest wave of capital investment in the sector anywhere in the world.

Ireland also employs the highest number of Medtech personnel per capita in Europe. And their reputation for excellence is second to none.

The Shingo Prize is one of the world's highest recognitions for operational excellence. In the past five years there have been 13 recipients worldwide - six of these have been the Irish operations of US multinationals.

This remarkable track record of Ireland's success on the global stage and the role teams in Ireland play everyday saving and enhancing lives around the world is well understood by the 255,000 people in Ireland employed directly and indirectly by US multinationals here - it is well understood by the over 7,000 community projects in Ireland supported by these teams - who donate more than 600,000 hours of their time annually to those projects.

Their impact is also well understood by people who heard the warnings of that politician in 1956 about Ireland being victim to 'fugitive investments' - they know the only fugitives that mattered were the countless Irish women and men who were forced to emigrate because they had no hope of employment here.

In 1961, the Republic's population had fallen to 2.8 million (in 1841, on the eve of the Famine, it stood at 6.5 million).

Between 1946 and 1961, 200,000 jobs disappeared - by 1961 a little over one million people had work - and the situation stayed that way for 10 years.

The result? Massive emigration, social deprivation and stagnation. Today our population stands at almost five million with over 2.2 million in employment and people are moving to Ireland from all over the world to make a life and career here.

This is not fictitious, and it is not 'fugitive' - throwing off protectionism and embracing global trade and investment was an unbelievably brave decision for this country to take in the early 1960's when it was facing economic collapse - but it has transformed our economy, society and our confidence on the world stage.

However, it looks like the 'tax haven' narrative will always be with us - and typically that narrative is based on studies and data of 20 to 30 years' vintage or even older.

It's a bit like calling out Ireland today for being homophobic because up to 1993 same-sex activity was criminalised and ignoring the joyous day in May 2015 when Ireland became the first country in the world to introduce marriage equality by popular vote.

It ignores the global developments in tax administration and policy that have happened in the past two decades - and Ireland has been a leader in many of them.

Ireland was one of the first countries in the world to move to a modern self-assessment tax system, Ireland's Revenue authority are recognised internationally for their effective use of IT to administer the system and to police multinationals. Ireland has a transparent rules-based legislative tax framework and does not do hidden deals, Ireland led on key EU initiatives, including anti-tax- avoidance and evasion initiatives.

That is why tax compliance levels in Ireland are best-in-class internationally.

Tax policy can never turn a bad business decision into a good one - but it can ensure that a good one does not get hindered.

The wave of multinational investment that has transformed Irish society and its economy and the waves that potentially will come will be attracted by competitive tax rates but are not founded on tax avoidance strategies.

The investments are founded on talent, skills and innovation and companies will move elsewhere if we don't plan to provide them for the future.

We have learned from the past, let's now focus on how we will address the challenges of the present so that the next generation will benefit from even greater opportunities in the future.

Mark Redmond is CEO of the American Chamber of Commerce Ireland

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