Budget 2015, Business, Economy, Martin Shanahan, Michael Noonan, Richard Bruton, Departments Of Finance, IDA Ireland, Europe

Ministers in talks to reassure key foreign firms on closure of ‘Double Irish’

State agencies and Government Ministers and officials have launched a co-ordinated campaign of letters and phone calls to senior executives of foreign multinationals, to reassure them that Ireland remains a top destination for investment following the budget.

Minister for Enterprise Richard Bruton hosted a conference call with officials and executives from up to 60 US multinationals yesterday afternoon, to discuss some of the measures that might affect them.

On Tuesday, Martin Shanahan, the chief executive of the inward investment agency IDA Ireland, also wrote to about 1,000 companies to explain the State’s budget proposals relating to foreign direct investment.

The IDA is also preparing briefing materials on the budget measures for Irish embassies, which are used by the Government to help sell the country to foreign investors.

Sources suggested to The Irish Times yesterday that Michael Noonan, the Minister for Finance, also spoke over the phone directly with certain multinational chief executives to discuss the budget. It was not possible to confirm this with the Minister’s advisers last night, however.

Several measures within Tuesday’s budget will impact directly upon Ireland’s attractiveness as a foreign investment destination, including the closure of the controversial “Double Irish” tax avoidance scheme.

Other measures included fresh incentives to stimulate investment in research and development, tax incentives for intellectual property and the extension of the Special Assignee Relief Programme tax breaks for foreign executives who relocate to Ireland.

Mr Bruton’s teleconference yesterday formed the cornerstone of what one official insisted is a campaign of “positive engagement” to press home Ireland’s perceived advantages over its rivals and the new incentives in the budget. It is understood the teleconference was conducted on an off-the-record basis, and officials would not be drawn on which companies took part or what was discussed.

It is understood, however, the companies were all based on the west coast of the US, where most of the biggest technology giants are located. It would therefore seem likely that as well as the new incentives in budget, the Double Irish closure would have cropped up on the call.

Mr Bruton was joined on the call by Mr Shanahan of the IDA, as well as officials from the departments of Finance, Justice and the Revenue.

“We had a very positive engagement,” Mr Bruton told The Irish Times following the call. “I’m even more confident now than I was 24 hours ago that, with the [budget] measures, we will increase the attractiveness of our regime.”

More discussions

The Minister is also scheduled to fly to the US in two weeks for discussions with executives from east coast firms.

Meanwhile, Mr Shanahan’s letter to 1,000 IDA clients on Tuesday evening highlighted that the 12.5 per cent rate of corporation tax is “settled policy and will not change”.

The letter referred to the closure of the Double Irish: “As the global landscape is evolving, Ireland has decided to change its corporate residency rules . . . IDA strongly believes that this will provide a reputations benefit for Ireland and our clients.”

IDA also said its staff in Europe and the US will contact all of their clients this week to discuss the budget measures. “We’re now in a position where current investors and potential investors know what Ireland’s corporation tax regime will look like post-Beps (base erosion and profit shifting).

Sinn Fein Budget proposals, budget 2013, budget 2014, gerry adams td, economy, finance

Sinn Fein Budget Proposals based on Flawed Methodology

Sinn Fein’s Flawed Methodology has seen the party make a u-turn on its wealth tax proposals. Sinn Fein were accused of ‘plucking figures from the sky’ when the party suggested that up to €800 million could be collected from their wealth tax proposals, many of Ireland’s senior economists have suggested that Sinn Fein remains stuck in the mud of protectionism economics as espoused by former Sinn Fein President, Ruari O’Bradaigh (RIP).

In recent times Sinn Fein have been embarrassed when it was shown that Sinn Fein President Gerry Adams TD had flown to America to enjoy Private Healthcare treatment, while his own constituents in Louth languished on hospital trolleys.

Sinn Fein’s wealth Tax u-turn

Sinn Féin will drop its calls for a wealth tax in next month’s budget as part of a dramatic departure from its approach to balance the State’s finances.

The principle of a wealth tax of 1 per cent on assets above €1 million has been an integral part of Sinn Féin’s pre-budget submission since 2010 along with a third 48 per cent tax rate and a cap of €100,000 on public sector salaries.

It has claimed that a wealth tax could yield €800 million to the State each year.

However, the reliability of the party’s figures was questioned by tax expert and barrister Suzanne Kelly who cast doubts on the sources of its calculations and the amount of tax that would be raised.

It led to scrutiny and criticism of the policy from its opponents.

The party has responded by leaving out any proposals for a wealth tax in its pre-budget submission, due out this month.

Sinn Fein Finance Spokesman Pearse Doherty

Finance spokesman Pearse Doherty said the party is still committed to a wealth tax but will not include it in its submission this year. He said Sinn Féin will deal with wealth assets as a special category, with all revenue generated being ring-fenced for job creation.

He said the decision was made because it was not possible to say with any certainty at present how much would be raised by a wealth tax. He said definite figures would only become available when the Central Statistics Office began collating data for personal wealth next year.

“It’s not disputed that a wealth tax will bring in hundreds of millions of euro,” said Mr Doherty, but he pointed out that estimates varied from €400 million to €800 million.

“Instead of putting the measure in and leaving ourselves open to the accusation that this is not costed, we will [leave it out] and rely on other measures to reduce the deficit to the target amount.”

Mr Doherty said the party’s submission would propose reducing the deficit by “slightly over €2 billion”, somewhat short of the €3.1 billion being pressed for by elements in Fine Gael and by the troika.

He asserted this figure would be sufficient to meet international obligations, but would also encourage jobs and growth.

Sinn Fein Property TAX

Sinn Féin’s opposition to the property tax will mean it will have to find €500 million in alternative measures.

Mr Doherty accepted that this will be a tough challenge. He said the focus was on fairness, protecting the public services, jobs, emigration and ensuring youth employment.

The third rate of tax of 48 per cent for those earning over €100,000 would be a key component, but he said the party was varying its policy of a cap of €100,000 on public salaries.

“It was a blunt instrument that was introduced as an emergency measure during the crisis. We have a more considered approach that is conscious of what happened in the Haddington Road Agreement [on public sector pay]. We are introducing the first step of that. There will be grades of reduction for those earning above €100,000,” he said.

It is expected the party will also propose cuts in politicians salaries, another red herring.

Economy, Central Bank, Finance, Quarterly Economic Bulletin, Banking, GDP

Economy, Central Bank, Finance, Quarterly Economic Bulletin, Banking, GDP

Prospects for the domestic economy have improved in recent months, according to a new report by the Central Bank.

However, the effect on overall economic growth will be cancelled out by weaker than anticipated export, according to the bank’s Quarterly Economic Bulletin.

Despite the anticipated shift in the sources of economic growth towards the domestic economy and two consecutive quarters of employment growth, the bank’s economists have not revised their labour market forecasts. They continue to believe that employment will expand by 0.3 per cent compared to 2012. If this happens it will be the first time in half a decade that employment has risen on an annual basis.

The Central Bank said growth in gross domestic product in 2013 would be 1.2 per cent, down 0.1 per cent from previous predictions. GDP grew by 0.9 per cent in 2012. For 2014, the forecast is unchanged at 2.5 per cent.

By contrast, the bank has revised up its forecast for the narrower measure of economic activity, gross national product, in both 2013 and 2014.

GNP is expected to grow by 0.6 per cent this year, 0.1 percentage points higher than its last forecast three months ago. In 2014, GNP is forecast to expand by 1.6 per cent, 0.3 percentage points higher than previously expected.

The report said growth in Ireland’s trading partners was expected to slow more than previously thought, leading to a slowdown in demand for exports.

“The performance of Irish exports has proved quite resilient to a significant slowdown in external demand over the last year reflecting the benefits of an improvement in competitiveness and a strong performance from services exports,” the report said. “Nevertheless, the progressive deterioration in the outlook for demand in Ireland’s main trading partners has necessitated a corresponding downgrade in projected export growth.”

The bank’s economists noted the increasingly marked difference in performance between exports of goods and exports of services, with the latter continuing to grow and the former stagnating.

Total exports are forecast to pick up in 2014 on the back of a rise in demand in major markets from the second half of 2013.

It said Ireland is still meeting its EU-IMF programme targets, but the bank yet again criticised slow progress by banks in dealing with non-performing loans, saying it prolonged the uncertainty over asset quality in the financial system.

At a briefing today, Central Bank chief economist Lars Frissel said further recapitalisation of the banks could not be ruled out, but how any such move would be funded, if required, was “an open question”.