Saturday, 20 November 2010

The 12.5% Irish corporate tax rate - part of a culture of fiscal fiddling.

Government-inspired tax scams were a major cause of Ireland's ignominious boom and bust. When I came back here in 1997, having lived abroad for some years, the Irish property market was already booming – in no short measure due to the proliferation of developments being sold under “tax incentive” schemes. These schemes were initially dreamt up to aid urban regeneration in depressed times, when places like Gardiner Street in Dublin (just as an example) were crumbling.

Whatever good purpose they may have served at the onset, however, they quickly became a means for the well-off, self-employed, and company directors to hide their income from the taxman. Obviously, when I returned to Ireland I was looking for a place to live, and had first-hand experience of seeing these investors in action.

Initially, I ended up renting an apartment on North Brunswick Street – one of many units owned by the MD of a large Dublin solicitors' firm. This nouveau landlord was able to write off rental income for tax purposes, thanks to the Secton 23 Tax Shelters, and was able to build up a large portfolio of properties on this basis. This was replicated throughout the whole country. The new Irish landlord class could even write off tax on non-Section 23 properties, if they had a section 23 or two in their collection.

As I say, this was already well underway when I came back to Ireland in 1997. So then we became part of the Eurozone, with its low interest rates, in 1999.   As Ireland had come from a situation where interest rates were relatively historically high (like Britain – I remember rates of 15% in 1989), the prudent thing for any government to do would have been to introduce fiscal measures in its property market to counteract this.

Not so the Irish Government and Finance minister Charlie McCreevy. He extended the Section 23 schemes and cut capital gains tax from 40% to 20%. I remember, at the time, being dumbfounded by this stupidity, but McCreevy was lauded by much of the public and media as some kind of Irish financial guru.

The boom then got “boomier”, in the mangled words of Irish prime minister Bertie Ahern. For the best part of a decade, the broadsheet supplements reported very average houses “making” astronomical sums at auction. They were talking about asset price inflation, which feeds into the whole economy, as though it was a good thing.

You know what happened thereafter. It culminated in the EU and the IMF arriving in Dublin to bail out Ireland, and save us from the crass stupidity of much of our populace and all of our rulers.

If there is one thing that should be learned from all of this, it is that the Irish political class is incapable of implementing a fair, sustainable tax system. Not only do its tax policies consistently favour the wealthy and hammer the PAYE sector unremittingly – in 2007 PAYE workers paid €10 billion of a total €13.5 income tax take – they distort, and eventually destroy the economy.

Another tax scam is, of course, the Irish corporate tax rate. I pay tax at 41%, yet Microsoft pays it at 12.5%. Companies from all over the world set up letterbox operations here to channel cash through and minimise their domestic tax obligations. German and British companies do it, starving their exchequers of income.

The British taxpayer, alone, whose treasury is being denied income by UK companies using this ruse will have to fork out £7 billion for the Irish bailout,  while the Irish Government sees its 12.5% rate as "non negotiable". That cannot be right.

Irish corporation tax must be increased as part of any deal.

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Anonymous said...

HI GM wonderfull to see our little nation punching above its weight as usual LOL it was all over the news for 2 days images of imf hitmen giving change to beggars in dublin, one commentator said in most countrys the mobsters have the govt in their pocked in irl the govt are the gangsters , my friend paris was glued to the tv hoping to see fairys and leprachauns she was sooooooh upset to find out her favourite little island had such a criminal gombeen govt ihad to stay the night with her,next we will hear how the lads hoowinked these auld imf maybe disraction will work BIFFO should round up all his MARYS and have them wear pink lederhosen and green wellies to all the high level meetings this is sure to impress the germans as you probably know the germans are riddled with fetishes about hefty ladies in lederhosen-BH

PPPPPPPony said...

JAYSUS BH - pink lederhosen and green wellies - I'm cancelling my ticket to KILKENOMICS and just gonna sit by the phone with my vibrator at the ready plus a coupe of spare Duracells of course.

Anonymous said...

‘Fucking Liars’
The Irish Papers and TV journalists have been very astute in their analysis of the present situation. In the vernacular, the government are ‘fucking liars’.

Why not put the present members of the government, their families and the family silver (to whom ever it belongs) on a barge on The Liffey and tow them out to sea and cast them adrift because that is what they have done to the Irish people; they have cast the Irish people aside to perish!!

The Gombeen Man said...

@ BH and Ponyboy. That's an enduring image alright...

@ Anon. Role model for our lot, alright. I remember years ago, the process of continually changing government parties was referred to as "Italianisation". Maybe Irish politicians are taking a different slant?

Anonymous said...

“Tiger Shit Remover”
In the late 1950’s and early 1960’s people like me who came to England used to send money home to our parents out of necessity because things were dire.

Now I find that I am sending money to my grandchildren in Ireland out of necessity as things are just as dire. My daughter asked me to send her some “Tiger Shit Remover” because the stink of 'Celtic Tiger Shit' is everywhere.

Ponyboy said...

Love the pic of Gombeen Ladeen. Just read my neice's facebook comment - "Well Fianna Fail - you've finally done it, the country is ruined"

Anonymous said...

steady on PB remember what your local pp said about that kind of passtime bh

Anonymous said...

Lazy and Disinterested
What a embarrassment to Ireland that: Aung San Suu Kri from Burma, Fernando Teixeira dos Santos, (Portuguese Finance Minister) and Christine Lagarde, (French Finance Minister) are more articulate in speaking English in terms of diction and syntax than Brian Cowan who stutters and stumbles and mumbles.

His lethargic demeanour denotes that he is lazy and disinterested. One expects a public figure to be an accomplished public speaker and an efficient communicator. Brian Cowan is not very articulate or very persuasive. He ought not to have accepted the job of Taoiseach for which he has proved himself to be unfit. Listening to him was arduous

Ella said...

@GM, love that gombeen boy pic! hey you know your 41% tax rate is higher, add in a couple of percent income levy, prsi and health levy, well you are up at 50%. Now that's 4 times what Microsoft are paying.
@Mr BH and PB, ha, ha, ha!

Dakota said...

12.5% is the least of Irelands worries now, they are talking about 250,000,000,000 by 2014. Over 300,000 for every tax payer and citizen. One thing I love about this damp island you can tell it like it is and get lambasted for it everytime. People just don't want to hear the facts much less the truth. Never changes.

Dakota said...

Anon 10:17 I just read your post. At the outset I have no interest in FF.
Anon I couldn't care less if Mr Cowan turned into work wearing a sackcloth and spoke jibberish backwards to his shoes. It's his Governments policies which are the problem not Mr Cowan's demeanour or powers of articulation. If you think charisma is going to do much good now ...well lets say we're not on the same page. The damge IMO (and it's becoming unpopular and unfashionable to say so) was created by not only FF but politicians in general and individuals over extending themselves. No one individual created the mess, it was a collective pursuit. I really don't like witch hunts.
No matter what you say about the man he is an individual and a human being in a difficult situation. I know its Gombeen mans blog but I'd ask not to personalise this as much as possible. If it slips into that, it reflects very bad on the poster.

The Gombeen Man said...

€300,000 each is a lot of money folks... by 2014 too.

Anonymous said...

It would be wonderful to know how the writer arrived at these figures. Oh my God! , nearly one third of a million € for each tax payer and citizen. All researchers allow % points for margins of error, but these figures seem to be very far out. This comment is not a criticism of the writer but just an educational enquiry

Mark Castilano LSE

Anonymous said...

Gombeen Nation is wonderful for: wit and humour; debate and deliberation; sarcasm, parody and mockery; logic and reason and even inane reckless armchair political opinion.

All of this is very good which is why I am very attracted to this blog. However issuing armchair prognostications about economics that may be frightening to people at this time of insecurity is not very kind or very sensitive.

Everyone has the right to be right, and the right to be wrong, but in any case where information such as financial predictions are issued, they should be accompanied by simple figures or references so that the data can be checked.

The accepted academic rules are simple; write whatever the hell you like, but the opinion offered must withstand examination and scrutiny otherwise it is "hot air" and "a load of old blather"

David Brendan McGinnity

Dakota said...

Do I sense hostility? Misdirected aggression possibility? If I got these figures wrong then I apologise. But if you have something to say then please have the courage of your conviction and address me directly. It would be a pity if my contributions were singled out for attack.

Dakota said...

I don't know if the last post was up loaded, if not forgive some information repeated here -
I saw many articles yesterday but I wanted to identify this one specifically, so it took a while to retrive.
There is a figure of 207 billion euro (I heard a figure of 250 billion on a news report, think it was on a UK station yesterday) I also heard reports of larger figures, but as Mr McGinty says, lets not upset people. Though I have to say I find that a bit rich.
As for how much it will be for every citizen in the ROI? Well Academic rules forbid
Just to a say MrMcGinty I'm sure I’d be intrigued with your definition of the word sensitivity.

The Gombeen Man said...

Only getting to check out the comments now. Thanks for that link, Dakota. Very interesting stuff. As the Government has a consistent record of getting things wrong, I should imagine those independent sources quoted might well be on the money.

Don't let Mr McGinty get your goat... think he's getting a bit cantankerous in his old age. That right mr McG ;-)

Anonymous said...

What’s in a Name?
I have come across the sobriquet ‘McGinty’ and ‘McGinty’s Goat’ before, even though that is not my name. The Irish Christian Brothers and The Jesuits used such tactics all the time as a means of provoking and subjugating people.

Sadly it is an Irish characteristic amongst the poorly educated and the unsophisticated to mock and parody persons names. It says more about the person doing the mocking than the person being mocked. It often denotes jealousy.

It is because of hostile attitudes like some of those expressed, that Ireland is presently the laughing of the world, (although undeserved).

It is rather tedious and boring to endure coarse, crude and unrefined traits that denotes some Irish people as being belligerent.

I do not apologise for being a little bit uneasy with inane and mindless, ill thought out, barrack room lawyer, second hand logic.

However, I don’t care because I am off to “The Isle of Capri” for Christmas and New Year for eight weeks, where I will read Fintan O’Toole’s books. Have a nice Christmas!


Dakota said...

To DMBG, I would like an apology! Your name is beside the point, bizzare how you made an issue of it.
I provided a link. You obviously didn't read it. Or maybe you did. Either way you didn't give a specific reply, choosing to attack me personally. Do you want to compare degrees? You seem to think all wisdom resides with you. By the looks of it, it's not wisdom at all but too much time you have on your hands.
Your response was not only completely over the top but also ill mannered, rude, obnoxious and downright offenseive. As for my nationality that is none of your damn business. A completely nefarious addition to your offering. You my friend are what I always try to avoid, a bully of the first order. You made some absolutely unbelievable remarks. I usually don't rise to such behaviour but I will make an exception for you.
The posts you have put on this site are nothing more than a smokescreen for a very very nasty individual. You thought I was an easy target. Think again.
Also from your DISCOURSE you are manipulative, devious and to cap it all, you also seem to think, you are higher up the social ladder than me. This latter observation, in itself, displays your immaturity. By the looks of it it also seems like you want to silence my voice. Oh and by the way one identity is enough.
Disgusted! Distasteful and offensive. Is that thought out enough for you?

anna said...

to Dakota: it would take me a long time to read through the intricacies of posts & counter posts above: I read yours often and i understand from them you must have specialist qualifactions in areas i don't. ie history/ politics etc, so i do try to learn a bit from them: I understand you are hoping to add facts: But I just don't know why other posters add things that seem to be a side issue, ie personel attacks and undermining , just for the sake of it: I find a DEEP UNDERCURRENT OF AGRESSION, FOR THE SAKE OF AGGRESSION IN THIS COUNTRY; why? I do think people are angry at many things- but yet anger is often not channelled in the right directions, because such chanelling would take courage and organisation.And this is often what is so wrong - it is very clear that we have a rich gombeen scum class at top- but do the 90% of the rest of the rail against them? NO_ I find such huge aggression, and back biting against anything but the real targets.To give a personal example, i find a great deal of antipathy against people from NI ( inc. me)but WHY??? Most people here have never been to NI- and NI people don't feel the same way back to Southerners, so Why the antipathy?? it's often passed off as fun and 'slagging'- but I think a natioanal characteristic is Anger ( much justified at many things in this country),,,,but which often finds an outlet in an undercurrent of aggression at the Wrong Targets or just Any Target...

Dakota said...

Thank you Anna for that. I am absolutely taken aback that such a personal attack could be made towards me on this blog. Genuinely surprised by the nature and tone of it. Things that individual has said, are completely counter to everything I hold dear and are deeply offensive. I make observations and if I can I impart some of what I have learned over the years. That is all.
Also Anna, I completely agree with you, misdirected aggression and bullying is and always was the scourge of this country. Its almost a cultural thing, sadly.

Anonymous said...

Dear Mr Dakota
DBMG anticipated that you would require an apology, and he will gladly give you one. It is not legal to give an apology to a pseudonym or non-du plume, so it would be in keeping with professional protocol if you provided your identity, unless there are compelling reasons for you not doing so, e.g. that you work for the secret service of Dublin Castle.

He has told me before setting off to Jackson, Wyoming, US, that he had already sent a post to Gombeen Man amounting to an apology insofar that he espouses your perspicacity and your erudite prognostications. Please be mindful that Mr Gombeen has already suggested to you not to allow the DBMG to get ‘up your goat’ which he found to be most amusing. He analyses everything that a person does, every blink of an eye, every movement of a finger, every intonation of a voice and every comma and full stop. He once parked his car carelessly and caused inconvenience to a neighbour, she demanded an apology. He wrote an apology consisting of 12 sides of foolscap. The poor woman was completely bamboozled.

Please check with Mr Gombeen Man if there are any apologies waiting in the bottom drawer, so to speak. If not I promise that DBMG will write an apology unsurpassed for it’s literary epistemology when he returns form Italy on 5th February 2011.

Prior to his retirement, his business address was in the public domain: The Hypnotherapy Centre (Leeds), 8 Lidgett Lane, Garforth, Leeds, LS25 7RL. [00447818023486].

You were quite right about him being immature, he is a 70 year old child and full of childish mischief even though he is an very experienced psychoanalyst and NLP hypnotist, so what he writes may not be as it seems and you being upset may be part of his impishness.

You must do what you think is right, but in my opinion the best way to annoy him is just to ignore the silly old duffer (I am his granddaughter and I do). Public confrontation and assertions of legal action is unwise as he has just obtained an LLB (just for fun).

Elizabeth Strathdee. (

The Gombeen Man said...

Anna and Dakota. I've lost count of the number of blogs/forums I have seen where comments on a given topic can mutate into completely different subjects, and go off on all sorts of tangents. And, of course, degenerate into gratutious personal attacks.

I try to keep track of things as best I can, but being pushed for time can't catch everything. You should see some of the stuff that I do reject.
The likes of yourself and Dakota have been contributing to and enhancing the blog for some time now, and your comments will always be valued and appreciated.

Remember too, that I am always contactable by email gombeenman(at) with regard to any issues concerning the blog or otherwise.

Anonymous said...

Look everyone, this bloody nonsense has gone too far. It's pistols at dawn in Phoenix Park, or let everyone put a sock in it. The topic has exhausted itself, so wind it up now.

The Gombeen Man said...

Dear Mr McGinnity.

Pseudonyms and non-du plumes are quite acceptable in blogland. Nom de guerre might be the more appropriate term in this instance. Dakota uses one, as do I. They are fine.

One such name per person would be nice, however.

I am sure Dakota will be good enough to accept your apology, and we can all move on.

Thank you.

Dakota said...

I try to be magnanimous GM, but if thats an apology it's a testament to the individual concerned. I don't want to encourage this but he/she is really a sinister piece of work. Every bully is a coward, but this one, also seems to have issues about control.

The Gombeen Man said...

The best thing then, Dakota, is for you to carry on regardless. :-)