Ireland must place a competitiveness agenda at the centre of economic decision making to future proof the country according to the American Chamber of Commerce in the association’s 2018 Pre-Budget Submission. The American Chamber’s priority is that Ireland remains a unique transatlantic trade and investment gateway and a location of choice for US inward investment to Europe and the submission, which follows extensive consultation with FDI leadership within the American Chamber highlights the key priorities for Budget 2018 with a focus on:
- Innovations in the Income Tax Code including reducing the marginal Income Tax Rate by 1% per annum over the next three years
- Strengthening Ireland’s Tax Roadmap so that the certainty of Ireland’s regime and its Corporate Tax Rate of 12.5% remains
- Accelerated Capital Investment Programme by setting a long-term Capital Investment Goal of 4% of GDP
150,000 people are directly employed in over 700 US firms located in Ireland, accounting for over 74% of all employment supported by the IDA. The value of this investment has reached $343bn and contributes €13bn annually in expenditure to the Irish economy in terms of payrolls, goods and services employed in their operations.
Mark Redmond Chief Executive of the American Chamber of Commerce said “Inward investment to Ireland continues to make a positive contribution to Ireland’s economic and social progress. Companies are attracted to invest in locations where they can access skills, where people will want to live and work, and where the surrounding infrastructures are supportive of business. We believe Ireland must now focus on the things it can control in the face of political, economic, social and technological opportunities and challenges – whatever they bring and whenever they impact – to sustain competitiveness for inward investment.”
The submission calls for a strengthening of Ireland’s personal tax and talent proposition by reducing the current higher marginal income tax rate to below 50% on a phased basis of 1% per annum over the next three years.
Mr Redmond said “A competitive income tax regime is an important deciding factor for many of those with the option to choose where they wish to locate to develop their career. The current higher marginal aggregate personal tax rate of 52% is among the highest when compared with countries that Ireland currently competes with for investment and the evidence from our members is that Ireland’s high marginal personal tax rate continues to be a dissuasive factor in the retention and attraction of skilled people. The Chamber welcomes the Government’s commitment to lower taxation rates as attracting and retaining specialised skills and leadership talent is vitally important in supporting the substance and ambitions of the FDI sector to retain and grow operations here.”
The submission also calls for the strengthening of Ireland’s Tax Roadmap in response to the changing international tax competitiveness landscape. Recommended measures include the targeted reform of the Ireland’s R&D credit regime to be strategically focussed in reducing the business cost of undertaking R&D in Ireland.
Mr. Redmond said “The American Chamber believes that an internationally competitive and certain tax policy is a necessary part of Ireland’s FDI offering to retain and attract substantive operations in Ireland. Ireland must continue to evolve its corporate taxation regime in response to changing investment environment, signalled reforms to the US tax code and further tax initiatives emerging from the EU. Certainty, consistency of application and consultation should remain the cornerstones of Ireland’s approach to investment policy.”
In the submission, the American Chamber concurs with the analysis of the National Competitiveness Council that the need for upgrading and modernisation of Ireland’s infrastructure will require targeted and prioritised investment to address infrastructural bottlenecks and calls for the prioritisation of investment activity, the reinforcement of Ireland’s Digital leadership and the championing of talent and innovation.
Mr Redmond said “In developing this submission we worked closely with our members to identify infrastructural bottlenecks that have the potential to constrain growth in the economy by dampening productivity and increasing costs. What was clear is that the members want Ireland to be recognised as one of the most developed, ambitious and welcoming locations in the world for existing and new business investments, and highly supportive environment for their future growth.”
“The role of the American Chamber is to promote policies that enhance Ireland’s competitiveness to be the location of choice for US FDI into Europe. Competition for FDI remains intense as investment, rather than trade, emerges as the key driver of the global economy in this century. We believe that if the measures suggested in our submission are embraced they will help drive growth by making Ireland more attractive for future inward investment.”