Hopes raised Trump may scrap border tax which would hit Ireland
US President Donald Trump is due to unveil a tax plan tomorrow - but it now seems unlikely he'll include a border-adjusted tax that House Speaker Paul Ryan has proposed, a senior administration official has said.
The border tax would hurt Irish exports into the US, and at the same time make it more attractive for US companies to shift operations back home.
That could potentially be a double hit to the economy here, which relies on foreign direct investment by US multinationals and access to the large American market.
The Trump administration will release a tax plan for individuals and businesses but it may not include every component that will go into final legislation, according to a different senior White House official.
The plan will offer "specific governing principles" along with indications of new rates, but a complete proposal probably won't be ready until June, Mr Trump's budget director said.
His political ally, Paul Ryan has proposed replacing the US's 35pc corporate income tax rate with a 20pc border-adjusted tax on US companies' domestic sales and imports.
Exports out of the US would be exempt under the plan, which is opposed by retailers, carmakers and oil refiners that rely on imported goods.
The Associated Press reported on Friday that Mr Trump said the plan will result in "massive" tax cuts for both individuals and businesses.
The cuts will be "bigger I believe than any tax cut ever", he said, according to the AP report.
Later, while signing an executive order related to a broad review of tax regulations from 2016 and 2017, Mr Trump said he wants Treasury Secretary Steven Mnuchin "to begin the process of tax simplification".
During the 2016 election campaign, Mr Trump initially issued a plan that included proposals for cuts in tax rates for individuals and corporations, a repeal of the estate tax, an offshore profits repatriation tax holiday for multinationals and a cap on the deductibility of business interest.
Finance Minister Michael Noonan said yesterday that the US tax system needed an overhaul.
"We'll wait and see on Wednesday. Like all tax issues, the devil is in the detail.
"You can have a principle that is very good, but it's only when you see the detail that you see if there's any problem to me," he told reporters.
"No one signalled any problems to me for Ireland on what's coming out in the US.
"There would be a general view in the OECD and the European Community that the US corporate tax system needs reform.
"It's out of line with other trading countries at present. The nominal rate is too high," he said.
Whether or not Mr Trump can follow through on his tax plan remains up for debate.
Challenges thrown up by his efforts to dismantle Obama Care, have yet to be resolved.
To push tax legislation through, the administration will need support in Congress, which it failed to secure on Obamacare.
Funding tax cuts will have to take account of wider budget pressures, including health spending.
Mr Trump's Republican Party controls a majority of 52 of the Senate's 100 seats.
Under normal Senate rules a 60-vote majority is needed to avoid legislation being ground down in lengthy debate. (Additional reporting Reuters/Bloomberg)