Saturday 14 December 2019

The Punt - Corporate tax snags in Australia again

Minister for Jobs, Enterprise and Innovation, Richard Bruton
Minister for Jobs, Enterprise and Innovation, Richard Bruton

Ireland's corporate tax regime has cropped up on the radar in Australia again - just a week after Minister for Jobs and Enterprise Richard Bruton came under fire during a trade trip there.

He was accused of "hypocrisy" by the Tax Justice Network after he told Australian media that the government backs attempts to put the lid on aggressive tax avoidance.

The G20 will meet in Brisbane in November (bomb-proof Limos for the event are set to cost the Australian government €12m, Aussie press reported yesterday) and among the topics up for discussion is corporate tax avoidance.

Yesterday, the Sydney Morning Herald pointed out that Airbnb, the accommodation-sharing online business that this year opened its European HQ in Dublin, books its Australian profits through its Irish unit.

Airbnb recently appointed Sam McDonagh as its boss in Australia and New Zealand.

Mr McDonagh would not say how much revenue the company made in Australia but said the company did "everything we can" to comply with all the taxation requirements in Australia.

Honour the bailout hero

Citigroup's chief economist Willem Buiter would be an unlikely grand marshal for a St Patrick's Day parade, but if Ireland gets its deal on early IMF debt repayment he should be in the running.

Back in January it was Buiter who first made a case for tapping the markets to radically cut the cost of servicing the IMF bailout loans.

Ireland should have taken "every shekel" of the €14bn offered by investors when the country sold 10-year bonds at a (then) interest rate of 3.5pc, and used the cash to pay off more expensive IMF bailout loans early, he said at the time.

The Irish Independent later revealed that the sticking point in that plan was a veto European lenders have over any such move.

But, with the interest rate on the IMF loans having gone up and the cost of borrowing on the bond market gone down, Buiter's financial logic has become ever more compelling.

Refinancing the IMF debt is now government policy and Michael Noonan is touring the Chancelleries of Europe looking for the go-ahead to do it.

Mind you, while it now looks like the IMF deal is being pursued as an alternative to securing European rescue cash to recapitalise the banks here, Buiter's view in January was that Ireland should be bloody minded and hold out for both. "Ireland cannot rely on generosity and decency, the only option is to play hardball," he warned.

Pay rises are back on agenda

Is it time for wage rises? There are mixed messages on this topic in this part of the world. Unions would, understandably, want them.

SIPTU announced earlier in the year that it would be campaigning for wage hikes. In July it said that its members across the manufacturing sector were winning increases with 210 wage agreements finalised so far in the year.

The business lobby including IBEC, are against it. And even Jobs Minister Richard Bruton isn't much of a fan.

Not so in the UK. Bank of England Governor Mark Carney yesterday used a speech at a UK trade union conference to say wages should start rising in real terms "around the middle of next year" and "accelerate" afterwards.

Addressing the annual conference of trade union TUC, he said workers deserved more money. and he praised workers who he said had not given up during the recession, and accepted pay cuts and shorter hours.

The TUC has complained this week that wages are not keeping pace with inflation, leading to a decline in people's living standards.

Closer to home, Mr Bruton said now was not the time for wage increases. "I don't believe the priority now is for wage increases," the minister said last month.

"The priority is to continue to focus on employment opportunities. We have to create the opportunities for enterprises to grow."

Carney's comments are likely lead to a resurgence in the debate on the issue here.

Irish Independent

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