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They further argue that other small European states like Luxembourg and Switzerland have even lower effective corporate tax rates and that lower taxes is the only way that smaller (and particularly more peripheral) economies have of competing against larger economies with much larger domestic markets and economies of scale. They further argue that if Ireland were to increase its corporate tax rates, many mobile businesses would leave - not to elsewhere in Europe - but to even lower tax countries in the far East and Caribbean. - resulting in a net loss of output and tax revenue for Europe as a whole.

I wonder how significant a factor the tax rate is to foreign companies investing in Ireland. I'd really love to see figures showing where these multinationals setting up Irish bases have come from. The line trotted out here is that they are primarily US firms, attracted also by the shared language, proximity, and Eurozone membership. Were this to be true, a modest rise should be palatable enough; at least to those with existing operations.

You're raising another issue - funding and devolution to local authorities. Rates are a significant income source for local authorities and one of the few things they can tinker with. Your suggestion couldn't really be called revenue-neutral  as the likely result would be cuts to local services as central funds get siphoned off into the banks. I can't corporate tax income being ring-fenced. That's not a argument against the abolition of rates though, just a cynical observation.

by ectoraige on Thu Feb 10th, 2011 at 07:59:20 PM EST

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