Just whose side is ICTU on?

6 December, 2012

A letter was published in today’s (London) Financial Times from Paul Sweeney, Chief Economist with the Irish Congress of Trade Unions.  Ostensibly it was an attempted rebuttal of a provocative opinion piece called “the best reform of Corporation Tax would be its abolition” which the FT had the temerity to publish last Tuesday.  The writer of the article was Michael Devereux of the Oxford University Centre for Business Taxation.

If Sweeney had restricted himself to the central issue dealt with by Devereux, that would have been fine.  But he goes on to say “Ireland, Luxembourg and Holland, which exploit so-called “tax competition” to reduce taxes for corporations and rich people, must be persuaded to co-operate with other states in the EU if the single market is ever to be a level playing field for all businesses…..The dividing line between “business friendly” and “the public  good” was crossed years ago in the area of corporation tax. The imbalance of taxation, which weighs heavily on citizens and lightly on multinationals,  has been set by the agents of multinationals, their professional advisers and, in turn, their professional bodies, taxation “institutes” and commissioned “research” ”.

It is (to put it mildly) disappointing to find ICTU trying to undermine our 12.5% Corporation Tax rate in such a manner.  At a time of crisis in our national finances, some might even call it treasonable.


2 Responses to “Just whose side is ICTU on?”

  1. piracetam Says:

    The thing to consider here is that uk tax policy is to reduce the corporation tax burden (30% rate in 2007 down to 22% in 2013) and also offer incentives to multi-nationals such as the patent box regime (qualifying profits taxed at 10%) and the finance co CFC rules (effective tax rate 5.75%). The uk now has one of the lowest corporate tax rates in the G20. This is not an accident, the tax take from corporation tax is somewhere between 10 & 15% of the uk exchequers tax income, income tax and NIC make up nearly 50% of the total tax take. The theory is that by incentivising multi-nationals to come to the uk with low ct rates, the uk tax take will increase because of all the additional employee taxes raised. There is also some fairly shoddy journalism around this, the BBC reporting that Starbucks has paid 1% tax on its uk income in the last 14 years. Corporation tax is paid by reference to taxable profits, income is irrelevant . However, that said, if it is true that Starbucks has been making uk losses for many years by virtue of inter-company recharges from overseas group companies, then that would suggest that there’s something not quite right with their transfer pricing. I believe that, as is usual in such cases, we’re not seeing the full picture here.

  2. […] is provocative, and is very much in line with The Irish Times’ house view (which mirrors ICTU’s view) that a business-oriented low-tax system is in itself suspect.  So if you make your living by […]

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