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For the 16,000 residents of Leixlip, a suburb west of Dublin, since Intel entered the town in 1989, economic prosperity has gone hand in hand with Ireland’s low tax strategy.

The American semiconductor company has since invested 15 billion U.S. dollars and created more than 5,000 direct jobs in its huge campus for manufacturing chips and developing artificial intelligence. It donated equipment to local schools and took out checkbooks for community groups and charities in neighboring villages.

“If you throw a stone, it will fall on people who have worked at Intel, or people who work at Intel now,” said local MP Bernard Caldwell. “Because of Intel’s investment, we are the enemy of many towns.”

The rewards for towns like Leixlip help explain Ireland’s enduring support for the idea of ​​low corporate taxes – and why the country supports eight countries, including Barbados, against the United States, China, India, and most EU countries. Supported global minimum taxation.

As part of the negotiations held by the OECD, the changes agreed last week include a minimum tax rate of 15% and a system by which countries can tax large companies based on their source of income. Irish Finance Minister Paschal Donohoe (Paschal Donohoe) warned that this could cost Ireland 2 billion euros in tax revenue every year. Other European adherents are Hungary and Estonia.

Ireland was once considered a poor in Western Europe, and has struggled with high unemployment and immigration for decades. It was not until the so-called Celtic Tiger boom in the mid-1990s that it enjoyed long-term economic success for the first time. In 2009, Dell’s decision to relocate its European manufacturing base to Poland is a reminder that success may soon fall apart. This history shows that people are unwilling to give up a regime that provides stable income.

Intel’s new microchip manufacturing plant under construction in Leixlip © Barrow Coakley

“Most Irish people recognize that since the late 1950s, Ireland has developed a deliberate and successful strategy of having a low, unburdened and stable corporate tax system, and it has attracted a lot of foreign investment,” John Said John Bruton. Served as Prime Minister from 1994 to 1997.

Researchers from the Institute of Economics and Social Studies, an independent think tank, estimated in a 2011 paper that Ireland’s lower corporate tax rate-currently 12.5%-increased productivity by 4 percentage points and increased between 1994 and 2005 About 6 billion euros. OECD data shows that the country accounts for less than 3% of EU economic activity, but from 1990 to 2020 it attracted more than 8% of EU net foreign direct investment.

Frank Barry, an economist at Trinity College Dublin, said he was “very worried” about the consequences of the lowest global tax rate: “We can talk a lot about our educated workforce, our English language, and joining the European Union (as Attracting foreign direct investment)… but they are all built on the cornerstone of the corporate tax system.”

“If you knock on the door, no one will say, I think we should raise the corporate tax rate,” said Joe Neville, a Leixlip member of Fine Gael, the second largest party in the Irish ruling coalition. “If there is a job… We think it provides jobs and opportunities, then you can understand people’s reluctance to change it.”

Some perspectives began to change, albeit to a small extent. Richard Boyd Barrett, a member of the “Profit First” Party who owns 5 of Ireland’s 160 seats, said that the story of multinational companies using loopholes to pay “pitifully low” taxes is challenging Ireland’s “sacred and inviolable” system.

One of the stories features Google, Tax avoidance Due to the so-called “dual Irish” loophole (and phased out between 2015 and 2020), its Irish holding company earned $13 billion in profits in 2019.

Leixlip MP Joe Neville: “If you knock on the door, no one will say, I think we should increase the corporate tax rate.” © Paulo Nunes dos Santos/FT

“Some people think that big companies pay horribly low taxes,” Boyd Barrett said. “But there is also a situation where this fear exists… If interest rates change, multinational companies may exit.”

Carl Rogers, an investment professional who worked in North America before moving back to Dublin, said that he used to think that lower interest rates were “certainly beneficial to Irish companies”. Now, he wants to know “whether corporate tax is so low and personal tax is so high, does the harm to the wealth of ordinary Irish citizens outweigh the benefits?” Ireland has a maximum marginal tax rate of 40% for income over 39,300 euros, and if income exceeds 49,357 euros , But also pay 8% of the general social expenses.

Raymond Hegarty (Raymond Hegarty) once managed five multinational companies’ start-ups in Ireland. He recalled that he had worked for a Japanese company that did not list tax as the top five selection criteria, but Focus on skills and ways to welcome foreign direct investment, etc. Language is also key: “Our President of Japan… will not learn a third language in a non-English speaking country.”

Connor Heaney, managing director of logistics company CXC Global, said that when they chose Ireland as their Emea hub in 2015, corporate tax was an “attractive place, but not the only consideration”. They also like the location of Ireland and the network of multinational companies, and “through the easiest place to do business in the 60 markets in which they work.” “If the Irish corporate tax rate changes from somewhere, it won’t start from here. We like Ireland.”

At Leixlip, people remain cautious when forced to consider succumbing to international pressure. Caldwell said that if the 12.5% ​​increase to 15% agreed by the OECD, it would not be a big blow, because “Intel is a too big company to move out of Ireland.” Neville said that “if we have to,” he “will not be afraid” to raise the Irish tax rate to 15%.

“When I was a kid, Intel came here. One question is why Leixlip and why Ireland,” he said. “Ireland is now the main hub.”

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