Tuesday 12 December 2017

Ireland impresses The Donald - again

US President Donald Trump Picture: REUTERS/Kevin Lamarque
US President Donald Trump Picture: REUTERS/Kevin Lamarque
Colm Kelpie

Colm Kelpie

It's very hard to know what Donald Trump means most of the time - but when he speaks, the world needs to listen.

When he talks about Ireland and tax, it's serious.

The transcript of his interview with 'The Economist' is full of the usual bellicose utterances and meandering statements with which we've become accustomed.

The fact, however, that the US president has singled out Ireland for particular mention - and fulsome praise it appears - is noteworthy in that it shows once again he has taken notice of us, and that we are lodged in his mind somewhere.

But what the significance of that is, is hard to understand.

The action taken by the country during the financial crisis clearly impresses him. As does the fact we've managed to build an economy on a lower corporation tax model.

He notes that Ireland never raised taxes during the crisis years, which of course isn't quite accurate. Extra taxes were imposed, most notably the Universal Social Charge, the effects of which we still see in our pay slips each month. We assume, however, that he's talking specifically about the corporation tax rate.

US companies, he said, were "pushed out" of America because of its corporate tax system, moved here and now like it. But his praise was quickly tempered yet again by the threat to bring those same US companies back home.

And that's a theme he returns to time after time.

The problem is, it's not entirely clear what companies he's talking about.

He makes specific reference at one point in the interview to the "disaster" of corporate inversions, in which US companies re-register overseas in order to avoid hefty tax bills at home. In an inversion, the American company typically buys a smaller foreign rival and relocates, at least on paper, to the rival's home country - such as Ireland - so that the new combined company is not based in the US. If those are the type of companies he's targeting, that's fine.

The Government has made it clear we don't want those anyway. But if it's companies that have moved here and generated considerable employment, that's a different prospect. The problem is, we simply don't know yet specifically what he means.

Irish Independent

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