Wednesday, November 17, 2010
Where the UK’s bailout of Ireland is going
Northern Foods to merge with Greencore
Irish company taking over a British corporation, relocating to the Irish Republic to take advantage of lower corporate tax rate; meanwhile UK taxpayers are bailing out the corrupt Irish government which is going bankrupt because it doesn't collect enough corporate taxes.
Posted by richc @ 01:38 PM (1203 views)
9 thoughts on “Where the UK’s bailout of Ireland is going”
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mark wadsworth says:
“the corrupt Irish government … is going bankrupt because it doesn’t collect enough corporate taxes.”
I’m all for bashing the Irish government, but the above statement is simply not true. If you look at total Irish tax receipts (about €40 billion), all the figures are roughly a tenth of what the UK collects (€1 -> £10), but corporation tax receipts in 2009 were €5.3 billion – which is more than we would expect, as UK corp tax receipts were £40 billion before the recession and are now about £30 billion (the banks aren’t paying any more).
This is because cutting the Irish rate to 12.5% halves the amount of corp tax they get from Irish businesses (-> expected receipts €2 billion), but all the tax minimisers are voluntarily paying another €3.3 billion. It’s not a huge amount of money in global terms, and this tax haven tomfooler only works for teeny tiny countries (obviously), but remember – the irish “miracle” was not due to this low corp tax rate – neither is the Irish bust down to their low corp tax rate – they are both entirely due to land price bubble and membership of EU (the worst of both worlds!!!)
tom101 says:
MW, What would you say would be the best way out for Ireland now?
mark wadsworth says:
1. Do an Iceland and tell their creditors to get stuffed.
2. Leave EU.
3. Adopt Georgist economic system, with zero % income tax, corp tax, VAT and collect as much LVT as they can possibly get.
4. Dish out LVT as Citizen’s Dividend to the extent not required for covering costs of running the police etc. They are smart enough not to have a massive Armed Forces, so they are already saving money on that.
tom101 says:
Interesting, Cheers Mark.
Perhaps they could start a splinter group EU equivalent and base it on, lets say free trade and social mobility….. or have we been here before?
But how is Iceland doing at the moment?
mark wadsworth says:
Tom 101, as was saying, Iceland has told its bondholders to get stuffed.
cyril says:
Correct me if I’m wrong but I thought it was the Irish banks that are causing this problem, and the Irish Government is in trouble because it rather foolishly agreed to cover their losses.
Why not cut out the middleman? Let the banks go bust and allow Irish citizens (only) to claim their lost deposits from the government.
alan says:
The government seems tied to the banks.
Ireland doesn’t want the IMF because it will be told what to do. But the Irish government has little choice. It simply needs to borrow an awful lot of money in the next few months….
Next w/end will bring an answer, if they wait much longer they will start infringing on the Christmas party season…
The Baldman says:
It has been suggested that they will be forced to raise CT rates as part of the deal?
Thomas Hennigan says:
Typical of British snobbery this comment. The British kept Ireland in poverty and made several attempts to totally rid themselves of the Irish who persisted in being Cathollics. To check this out, look at the history of the Irish Famine in the 19th centruy and the reactionof the British Government. As for the cause of the crisis being low corporate taxes that is just nonsense. The real cause is the lack of regulation of the banks, werckless borrowing. Shouldn’t the creditors pay the consequences of their bad investment decisions more than the ordinary Irish taxpayer?