AmCham Highlights Cost Threat To Irish Competitiveness

by Jason Gorringe, Tax-News.com, London

27 January 2006

While American companies in Ireland remain confident about the country's economic outlook, a substantial proportion have highlighted concerns over the costs of doing business in Ireland, particularly those associated with hiring staff, energy and transport, according to the newly-appointed President of the American Chamber of Commerce Ireland, Dr Fraser Logue.

In a recent survey of members of AmCham Ireland, more than three-quarters of the 86 respondents were confident that the Irish economy will continue to grow strongly in the coming year, and more than two-thirds expect to hire new employees in the same period.

"The continued success of the Irish economy and of multinational companies based in Ireland, as highlighted by recent announcements from companies such as Amgen, Google and Wyeth is to be welcomed," commented Dr Logue, who is Director of Operations at Abbott Diagnostics in Sligo, one of Ireland's longest established multinationals in Ireland.

"The Government’s commitment to maintaining a pro-business environment, a competitive tax regime, and the significant investment in education announced in the recent budget is very positive and provides strong foundations for continued success in attracting foreign investment," he added.

However, Dr Logue warned that while business confidence among chamber members is high, that confidence is tempered by continuing concerns over the growth in Ireland´s cost base.

"An overwhelming 76% of respondents to our survey do not believe the recent budget has done anything to reduce our cost base, and we are aware of investment which has been lost to Ireland because of the cost of doing business here," he observed.

Nonetheless, Dr Logue believes that Ireland can continue to attract foreign investment by playing to its strengths, namely, its 12.5% corporation tax and economic stability.

"A low corporation tax rate is just one of any number of reasons why US multinationals chose to locate here, but it is a very important one," he noted.

"Critics of the corporation tax rate should look carefully at what it has achieved before moving to change it," Dr Logue warned.

More than EUR2.5 billion was paid by foreign companies in corporation tax during 2005, while over EUR17 billion is paid in wages and services annually by US companies alone.

The AmCham chief also urged Ireland to continue resisting the call for the harmonisation of company taxes across the EU, an idea which is supported by a number of governments such as Germany and France.

"The high tax economic model followed by some European countries simply is not working today," he stated.

"They need to think again about their own policies rather than attempting to influence those of others," he added.

With over 600 companies employing over 90,000 people (5% of the Irish workforce), almost 65% of all employment supported by IDA Ireland, the government's investment promotion agency, is represented by US companies.

In addition, it is estimated that a further 225,000 jobs in Irish industry are directly supported by the US companies based there, while total US investment in Ireland has surpassed $73 billion

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