Sir, – Your Editorial (February 13th) fairly summarises the complex situation surrounding Ireland's controversial low rate of corporation tax. Your leader ends with the words "further and bolder steps are needed".
Most companies in Ireland are taxed at the standard rate of 12.5 per cent, but international funds in the IFSC enjoy a zero rate of corporation tax plus a zero rate of capital gains tax. Another distinction is that Irish companies are taxed at 25 per cent on passive income.
No distinction is made between companies that create direct employment and special purpose companies which create no direct employment. There are many such SPCs registered in Ireland.
So one “bolder step” the Department of Finance might consider is to increase the headline rate of corporation tax to, say, 20 per cent, but give a tax credit for PAYE remitted to the Revenue. This would be very easy to administer and would give added encouragement to truly employment creating projects and discourage companies creating little or no direct employment.
Indeed, as the international pressure grows on Ireland to increase its headline rate of corporation tax this simple measure could be a useful defence before other countries take retaliatory action in unrelated fields such as agriculture and fishing rights. – Yours, etc,
DAVID McCABE,
Waltham Terrace,
Blackrock, Co Dublin.