Vulnerability demonstrated as economy loses €18bn after US tax repatriation
Sinn Féin Finance spokesperson Caoimhghín Ó Caoláin TD commenting on a report from the United Nations Conference on Trade and Development (UNCTAD) that showed that multinationals operating here slashed their investment by $22.7 billion (€18.2 billion) in 2005 said that these facts demonstrated the vulnerability that results from over-reliance on foreign direct investment. Deputy Ó Caoláin said it further demonstrated that our economic future cannot be dependent on maintaining our status as a tax haven for multinationals.
The Cavan-Monaghan TD said: "It is undoubtedly a matter of concern that US multinationals can with such ease cut their investment here by €18.2 billion in one year. However, this development, which is just one more indicator that the present economic regime is not sustainable in the longer term, is not surprising.
"For some time US authorities have become concerned about how American multinationals use their Irish operations to manage and repatriate profits. The special incentives for companies to repatriate their foreign profits back to the US were introduced by the US administration in response to growing domestic political pressure about the seepage of jobs and investment into 'tax havens' such as this state.
"The American Jobs Creation Act, which came into force in 2004, allowing US multinationals to repatriate profits at a favourable rate of corporation tax, will I am sure not be the last such move by the Bush administration. We need to know what strategies the government is putting in place to deal with such eventualities.
"Our economic future cannot be dependent on maintaining our status as a tax haven for multinationals. This is under threat from the new EU member states who are slashing their corporation tax rates and engaging in a race to the bottom, and from those such as the US administration who are unwilling to tolerate the impact of companies seeking to locate their profits overseas.
"The Government has a responsibility to minimise our vulnerability to recessions generated by international markets by reducing our over-reliance on foreign direct investment and by developing our indigenous industries, public enterprise and the social economy sector. This is not being done at present."