Category: Archive

Bertie’s plea

February 17, 2011

By Staff Reporter

The almost 400 of them that have been present on Irish soil over the past couple of decades have not only have provided jobs in the direct sense, but have generated many more in that they have drawn on goods and services provided by indigenous Irish companies and individuals.
Part of the reason as to why Ireland became such an attractive location for U.S. companies was the relatively lenient corporate tax regime.
That regime has come under pressure over the years and, in recent times, under increased scrutiny from the European Union, Britain and, most crucially, the United States government.
The Obama administration wants to levy tax on Ireland-based American firms at the same rate they would pay on U.S. soil. This is understandable if the intention, and the result, was to keep jobs in America from migrating overseas.
However, even if the rate was raised to U.S. levels in Ireland, the jobs that would ultimately be lost in Ireland would not necessarily come back to the U.S. They would just as likely be moved to countries such as Poland where labor costs are significantly cheaper than either Ireland or the U.S.
We have seen such a scenario in recent weeks in the decision by Dell to shift about two thirds of its Irish-based jobs to Poland.
Another reason as to why so many American companies have based themselves in Ireland, both in the South and the North (where a higher corporate tax set by London applies) is that the island provides easier access for products into the EU marketplace.
Bertie Ahern was not holding back in the metaphor department last week when, speaking at Molloy College on Long Island, he described what would happen to the Irish economy if it no longer was an attractive location for U.S. business.
His successor as taoiseach, Brian Cowen, might not quite match Ahern’s words when he meets with President Obama in a few days. But he is certain to leave the president in no doubt that the Irish economy is especially vulnerable at this point in time.
Doubtless, too, Cowen will stress to the president that Irish companies operating in the U.S. now come close to matching the number of jobs that American companies in Ireland generate.
Indeed, in proportional terms, Irish job generation in the U.S. is far ahead of America’s in Ireland.
The flip side of this, of course, is that the number of jobs created in the Irish economy by U.S. firms makes up a proportionally much larger potion of the overall economy in the 26 counties.
The damage caused by a large-scale U.S. withdrawal would be massive and certainly to a degree envisaged by Mr. Ahern.
It is to be hoped then that the St. Patrick’s Day bonhomie in the White House will extend into the colder corners of economic imperative.
This year’s White House get together, then, is an especially serious affair. Brian Cowen has a task on his hands well beyond passing over a bowl of shamrock and extending a face-to-face invitation to the American president to visit Ireland, land of the now faded Celtic Tiger.

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