The “writing is on the wall” over the future of Ireland’s corporate tax system, the Labour Party has said, calling for the Government to sign up fully to international tax reforms.
As The Irish Times reports, in the wake of Taoiseach Micheál Martin’s comments in New York, where he held out on guaranteeing the future of the ultra-low rate, Labour’s finance spokesman Ged Nash said there is an “inevitability of (tax) reform in this State, that’s been clear for some time”.
The party’s submission to Minister for Finance Paschal Donohoe’s consultation on Organisation for Economic Co-operation and Development (OECD) international tax reforms stops short of explicitly calling for an increase in the rate.
It says Ireland should commit to “pillar two” of the OECD’s process, which contains a commitment to a global minimum corporate tax rate of “at least” 15 per cent.
“It is the view of the Labour Party that fully committing to pillar two will enhance our international reputation, provide important certainty for companies who wish to invest here and will help to put an end to the damaging global race to the bottom in corporate taxation rates,” the submission states.
They argue that tax loopholes and avoidances schemes that exploits mismatches between tax and residency laws in Ireland and other jurisdictions have “critically undermined the affirmative case for our 12.5 rate and Ireland’s international reputation”, leading “directly” to the OECD reforms process.
Grounded in reality
“Our submission is grounded in the reality about the direction of travel of this process. It’s not the Labour Party saying we no longer support the 12.5 rate, it’s an acknowledgement that the change is under way,” Mr Nash said.
"Either we shape, influence and embrace that change, or we have it imposed on us from a position of weakness.”
He said that while there is not an argument to change the rate immediately, “the writing is on the wall”.
“We don’t believe the 12.5 per cent will be retained into the future. We believe that will change, whether we like it or not.”
Speaking on Tuesday morning, Green Party Minister of State at the Department of Public Expenditure and Reform Ossian Smyth pointed out there is a commitment to the 12.5 per cent rate in the Programme for Government and that it was in his party’s manifesto.
“I don’t see any change about to happen imminently. We have an agreed policy on it,” he said.
