Sir, – Pádraig Cronin, tax partner and vice-chairman of Deloitte Ireland, argues for a lowering of corporate taxes and suggests that by "committing to move to a lower corporate tax rate – perhaps even 5 per cent – on a phased basis by 2023 would send a powerful signal that Ireland will remain competitive and diminish the 'pull' factor" ("Taking no action on issue of corporate tax is not an option", Business Opinion, July 22nd).
Indeed this would be a powerful signal, given that while the headline corporate rate is currently 12.5 per cent, the “effective tax rate” is often just half this rate for large multinationals (and sometimes as low as 2 per cent).
So by reducing the headline rate to 5 per cent as suggested by Mr Cronin (a 60 per cent reduction on the current rate), one would at the stroke of a pen wipe out about €6 billion in annual corporation taxes from the Irish coffers on current trends.
What would be a much better idea, rather than reducing the headline rate to 5 per cent, is that the 5 per cent should be the minimum “effective tax rate” for all corporates.
It would be simple to administer and, just like the universal social charge on personal income, every corporate would pay and progressively so. It would also cut out the myriad reliefs, writedowns and loopholes that currently exist in calculating corporation taxes in the multinational sector.
Of course, my suggestion is unlikely to happen as the big accountancy firms that advise their clients on how to minimise their tax exposure in Ireland would then have very little to do. – Yours, etc,
TOM McELLIGOTT,
Listowel,
Co Kerry.