The government should accept a worldwide minimum tax rate of 15 percent, as the fight to keep the rate at 12.5 percent “is simply not worth it,” said former chairman of the Irish Fiscal Advisory Council, Prof. John McHale.
The reputational damage done to Ireland by its rejection of the 15 percent rate agreed by all but nine countries of the Organization for Economic Co-operation and Development is too great, he said.
“Considerable reputational damage is being done by the fact that international history calls Ireland a holdout. I think it makes sense to see reality now and to accept the move more openly, probably at a 15 percent rate. “
The government is under “significant pressure” on the corporate tax rate and has been waiting to see what happens in the US Congress, said Prof. McHale.
Meanwhile, Sinn Féin warned TD Pearse Doherty that the government’s summer economic statement “will not meet the needs of a recovering economy” and “will not resolve the housing crisis.”
No breakdown has been given on how the additional investment budget of € 800 million would be spent and more clarity is needed on how 18,000 homes can be delivered per year.
“The government clearly did not understand the extent of the housing crisis,” said Doherty. “You just don’t get it; that is insufficient and not overwhelming.
Tánaiste Leo Varadkar’s plans for tax cuts worth EUR 500 million are “the wrong decision at the wrong time” given the size of the investment required in public services, the party’s finance spokesman said.
The level of additional public spending stated in the statement does not meet the demands of a recovering economy in areas such as health, education and childcare. “Now is the time to invest,” said Doherty.
Relics of austerity
Social Democrats’ finance spokeswoman Róisín Shortall said the latest statement was marked by a belief that EU budget rules suspended during the pandemic would apply from 2023.
“These rules are an anachronistic relic from a period of austerity and will limit the ability of EU member states, including Ireland, to adequately respond to the pandemic-induced economic shock of the century,” said Shortall. Instead of being “resigned to defeat”, the finance minister should use his position as president of the Eurogroup to advocate reform of fiscal rules, she said.
“Instead of a short-sighted focus on deficit reduction, the government must ensure that our significant and long-standing deficits in infrastructure – especially in housing – and in the public sector are closed.”
Public Spending Minister Michael McGrath defended the summer declaration, saying it was “the right approach”.
At the Newstalk Breakfast, Mr. McGrath said the statement was balanced and would aid economic recovery.
“We believe that what we are pretending to be the right approach overall,” he said. “It’s balanced, it will support economic recovery, it prioritizes investment in our economy, and it contributes to the sustainability of public finances by focusing on deficit reduction.”