A significant part of our current wealth has been based on foreign direct investment (FDI) which was attracted by our low corporate tax rate. I propose that this be intelligently modified so as to not only attract, but develop, smart and sustainable enterprise and employment. I envisage this occurring in three main areas:
1. Third-Level Special Economic Zones
Designate the campus of every university and institute of technology a low-tax (or tax-free) zone, much like the Shannon Free Zone and several others around the world, for start-ups and collaborations. Use these areas to hothouse new and innovative technologies and businesses.
2. Green Corporation Tax Rate
This is very simple: foreign direct investment in green, sustainable, carbon-low technologies pay a substantially reduced corporation tax rate for a fixed period (5 to 10 years), incrementally increasing thereafter to the normal rate.
3. Carbon-Free Commerce.
Index-link all businesses’ corporate tax payments to their carbon-footprint. As the Government is now producing a carbon budget, so too should every business. A baseline rate should be set: those who exceed it should pay more corporation tax, those who stay below it should pay less. (The idea is that this gives similar incentives to home and pre-existing business as are given to FDI above).
I doubt that the EU, and the French in particular, will like any of these ideas, but I daresay that there are very few people in Ireland amenable to are willing to take instruction from that quarter these days anyway.
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