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Wednesday Newspaper Review - Irish Business News and International Stories - - September 24, 2014
By Finfacts Team
Sep 24, 2014 - 11:20 AM
ECONOMIC think-tank the Nevin Institute has called on the Government to make a Budget 2015 adjustment of €800m.
It said today that the current rate of economic growth is not established enough to risk introducing tax cuts - this has already been mooted ahead of the Budget.
Last week, Finance Minister Michael Noonan said he expected GDP growth of 4.5pc this year based on strong second quarter figures.
ALMOST €10bn was wiped off the value of more than a dozen companies on both sides of the Atlantic yesterday after the US announced rules to curb so-called corporate inversions.
Junior Finance Minister Simon Harris signalled to the Irish Independent that Ireland had nothing to fear from the move by the US Treasury, which will, in theory, make inversions more difficult to do and less rewarding.
In an inversion, a US corporation, often a pharmaceutical company, avoids US taxes by buying or setting up a foreign company in a country and then moving its tax domicile to that country.
Tesco has scrambled to contain the fallout from its accounting scandal by parachuting in its new chief financial officer more than two months early.
Alan Stewart got his feet under the desk at Tesco yesterday. He wasn't due to start the job until December 1.
But Tesco managed to strike a deal with Marks & Spencer, Mr Stewart's former employer, in order to permit him to start his new job this week.
Tesco insisted it did not pay any financial compensation to M&S in order to allow Mr Stewart to begin his new role earlier than planned.
Ireland is “not a brass-plate location” for companies moving their residency for tax purposes and the Government has told the US it has never been a supporter of controversial corporate inversions, Taoiseach Enda Kenny said yesterday.
Responding to new rules issued by the Obama administration to crack down on tax avoidance by US firms, Mr Kenny said Ireland was a place where “real companies employ very significant numbers of people”. “As for the American government, we have never been a supporter of tax inversions and we have made that point to them. That is a matter entirely for the government here,” he said.
His comments came as more than $12 billion (€9 billion) was wiped off the shares of almost a dozen firms considered candidates for inversions – a practice that sees US groups acquiring smaller foreign rivals and relocating their corporate headquarters to those countries to avail of lower corporate taxes.
Pfizer has approached Actavis to express its interest in an acquisition that could allow the US drugmaker to move overseas and reduce taxes, in a sign the Obama administration’s efforts to curtail such deals could fall short.
Pfizer made its approach before the US treasury department announced new rules September 22 to make such deals - called tax inversions - more difficult, people with knowledge of the matter said.
Those changes won’t deter Pfizer, even if they are a complication, one of the people said, asking not to be identified discussing private information.
Another high profile inversion deal, Burger King’s purchase of Tim Hortons, will proceed, the Canadian company said after the rule changes were revealed.
Michael Noonan lost the run of himself recently when he suggested, in true cheerleader style, that Docklands “has the potential to be the Canary Wharf of Dublin” and rival other international locations such as Boston’s Seaport and Singapore’s Marina Bay.
All three examples are characterised by clusters of high-rise office buildings and some residential. In Marina Bay, building heights range from 40 to 75 storeys, while Canary Wharf’s centrepiece – One Canada Square – rises to 50 storeys, or 235 metres.
The Minister for Finance sounded so bullish about the prospects of doing this kind of stuff in Dublin that he might even be accused of recycling the “Manhattan on the Liffey” vision put forward by the Progressive Democrats in 2007, just before the crash.
The levels of Irish income tax are now among the highest in the EU and are acting as an impediment to attracting foreign direct investment, according to the Irish Tax Institute.
In its pre-budget submission, the institute points out that last year a total of €23bn was collected between income tax, PRSI and USC.
This is €2bn higher than in 2007 when there were 200,000 more people in the workforce.
Moreover, 23% of income tax payers pay 81% of the entire income tax wedge.
“This large figure has been brought about through the very significant increases in personal tax rates (through the USC), a reduction in the tax band, the introduction of the high earners’ restriction and a raft of base broadening measures.
“There have also been changes to PRSI rules which broadened the base of taxable income and eliminated the income ceiling for employees.
“In addition there were reductions in the main tax credits; the personal tax credit and the PAYE tax credit,” said tax institute president, Andrew Gallagher.
Euro Topics: The US started carrying out airstrikes on IS locations in Northern Syria on Monday night. According to US media, five Arab states are also taking part in the mission. Finally the international community is taking action, some commentators write approvingly. Others warn that religious tolerance and more willingness to take in refugees would be a better response to the IS.
The world is finally taking action: Military force is imperative now to put a stop to the IS militias, the liberal Swedish daily Göteborgs-Posten contends: "As long as the United Nations remains incapable of acting the US and EU must intervene without a UN mandate, if possible in cooperation with Nato member Turkey, Egypt, Iraq and other Arab countries and Iran. The US has opened the door a crack for its arch-enemy [Iran] and an agreement no longer seems entirely out of the question. In this way old foes become new allies. But military force is necessary to defeat the IS and depose Syrian president Bashar al-Assad. The international community can no longer look on impassively while the IS warriors drive away or kill all those who don't share their extreme interpretation of Islam. And it can no longer allow Syria to sink further and further into an endless civil war."
Turkey left on its own with refugees: In view of the roughly 100,000 refugees that have flooded into Turkey in recent days, the pro-government daily Yeni Şafak finds the accusations that Ankara is doing nothing and too close to the IS absurd: "The UN has declared that the number of refugees could rise to one million. Even those who don't want to look the truth in the face must admit that Turkey is the only country with open borders, and will thus be forced to bear the burden of the flood of refugees. ... Turkey has taken in over a million Syrian war refugees, and has [already] been left in the lurch by the international organisations, the US and the EU. Its proposal to set up a security fund for the refugees was rejected, and the West has left the Syrians to their fate. ... Without changing its policy, which ensures that the atrocities continue, the US now wants to attack the IS and is inviting Turkey to join in the fun."
Sarkozy copying Berlusconi's tactics: French ex-president Nicolas Sarkozy's announced comeback reminds Spain's left-liberal daily El País of Italian ex-prime minister Silvio Berlusconi's opportunistic maneuverings: "It's clear that France and the rest of Europe are concerned about the high level of support for right-wing extremists in the polls. But Sarkozy's return to active politics raises the suspicion that he is taking the bull by the horns in order to avoid other problems. ... The ex-president is facing a whole series of lawsuits for suspected offences ranging from influence peddling to illegal party financing to having accepted help from the deposed Libyan dictator Muammar al-Gaddafi in becoming president for the first time in 2007. Neither Sarkozy's posing as saviour of the nation nor the legal circumstances surrounding his comeback are original. Berlusconi has done it all before in Italy."
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