IDA chief rejects danger in UK's plan to slash corporation tax

Martin Shanahan argues that any cuts will not necessarily make Britain more attractive to businesses...

ESRI, Brexit, FDI, Foreign Direct Investment, corporation tax, Ireland, EU,

A poster is seen at a Brexit conference in the Aviva Stadium in Dublin | Image:

IDA Ireland chief executive Martin Shanahan has dismissed concerns that a UK move to cut its corporation tax could hurt the Irish economy.

Taking to Jonathan Healy on Newstalk's Lunchtime, the head of the Irish Government's inward investment agency argued that Ireland would remain attractive to investors in the face of a potential slash in the UK's corporation tax.

UK Chancellor of the Exchequer George Osborne has stated that the UK will lower its corporation tax to below 15% in a bid to battle the negative economic effects of Brexit, while Northern Ireland has already indicated that it plans to match Ireland's current rate of 12.5%.

Shanahan said:

"We deal with changing variables all the time. Other competitors I'm sure will be improving their offerings."

Shanahan predicted that any cuts would not change the impact of the UK's decision to leave the European Union. 

He continued:

"I would also say that Ireland's tax rate compares very favourably.

"We have one of the most transparent, competitive and stable tax regimes in the world now and I think investors will continue to find that attractive as well as the other attributes."

Shanahan confirmed that the IDA would purse any potential new global business Ireland could secure as a result of Brexit:

"I suppose what Brexit has done has created uncertainty.

"Some of the companies will seek certainty and ensure their access to the European market and we'll be looking at other locations. And if there's any mobile investment out there, IDA will be chasing it and fighting for it, as we always have done over many years."

When it was suggested that the current housing crisis in the Republic – and particularly the capital – could deter investors, Shanahan seemed confident that the Government can deal with the issue.

"Clearly over time this is an issue which will need to be addressed," he admitted.

"[But] the out-turn for last year was one of the strongest we've had in our 67-year history.

"And all of those people are up and operational.

"So clearly this is high up on the Government agenda. Their action plan for housing will have an impact on many different aspects, including obviously the most vulnerable.

"But it will also have the impact of increasing the housing stock and alleviating pressure, particularly in Dublin.

"I would also say that our strategy is obviously to increase the amount of investments going into regional locations, [and] in many of those places there aren't the same constraints.

"So there's still plenty of capacity – we're absolutely open for business."