But what is going on in Ireland? On Thursday, October 7, the country agreed to increase its sacrosanct corporate tax, which will drop from 12.5% to 15%, in order to align with the global minimum tax decided on Friday by the Organization of economic cooperation and development (OECD). Three days earlier, the government presented a major infrastructure investment plan worth 165 billion euros, after more than a decade of fiscal prudence. The two pillars of the national economic model – low taxation and austerity – seem somewhat shaken. “The country is moving towards a model that is a little more social-democratic than before”, says Kieran McQuinn, economist at the Economic and Social Research Institute (ESRI), based in Dublin.
The tax change is the most symbolic. The corporate tax at 12.5%, and especially the many extras that made it possible to pay significantly less, have long been the hallmark of the green Erin. Even when she needed a back-up plan from the International Monetary Fund and the European Union (EU) in 2010, after her banks collapsed, she refused to change it. The strategy was to attract as many multinationals as possible from all over the world, especially the United States.
This worked very well. After the 2010 crisis, the recovery came from the exports of multinationals. Despite the Covid-19 pandemic, Ireland was the only state in the EU not to experience a recession: exports in pharmaceuticals and new technologies, two of its leading sectors, made up for the fall in the economy. consumption due to containment. In 2020, gross domestic product (GDP) growth was 5.9% and is expected to exceed 12% in 2021 (multinationals are so dominant in Ireland that GDP is a measure that distorts local economic reality; ESRI calculates an alternative data, which gives – 4.2% in 2020 and + 7.1% in 2021, which remains very solid).
“More investment and more education”
During the negotiation on the agreement on a minimum world taxation, Ireland continued to be pulled by ears. By expressing its reluctance, the government has sent a clear signal to investors: it will not go beyond the 15% rate. “We were able to accept it because the United States, where a large part of our multinationals come from, was part of the agreement”, says Gerard Brady, economist at IBEC, employers.
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