OECD confirms Irish economy needs to increase support for local indigenous enterprise – Matt Carthy MEP

Sinn Féin MEP Matt Carthy has said an OECD report on the Irish economy released this week warns the Irish government that its support for multinational enterprises needs to be rebalanced towards local small and medium enterprises.

The Sinn Féin MEP said:

“The OECD has confirmed Sinn Féin’s analysis that the Irish economy needs to increase support for local indigenous enterprise rather than focus on tax breaks for multinationals in the knowledge-based sector if we want to reverse the downward trend of productivity growth.

“Such growth is not taking place among local firms and SMEs in the research and development sector. The OECD labels the public financial support to research and development businesses ‘skewed’ towards R&D tax credits, and explicitly calls for public resources to be redirected away from large multinationals to these local SMEs in order to develop a balanced and sustainable economy and lift productivity.”

Carthy, a member of the European Parliament’s Economic and Monetary Affairs Committee, continued:

“The fact is the Irish government’s tax policies in this area are not aimed at creating intellectual property or lifting productivity but at providing sweetheart tax deals to giant global corporations.

“The Irish state now has a 25% tax credit for R&D companies, an intangible asset regime that favours multinationals and now the ‘knowledge box’ – on top of our already competitive headline corporate tax rate. These knowledge boxes have been used internationally as tax avoidance tools.

“This latest warning from the OECD follows comments by the head of the OECD’s centre for tax policy in Dublin in March, who said the development of knowledge or patent boxes does little to actually foster innovation and the creation of intellectual property.

“The introduction of the knowledge box in Budget 2016, which halved the corporate tax rate in the Irish state to 6.25% for certain knowledge-based companies, was a direct response to international pressure forcing the government to commit to phasing out the notorious ‘Double Irish’ tax loophole. It’s a handout of tens of millions per year to multinationals. Let’s face it – Finance Minister Michael Noonan just replaced one tax avoidance mechanism with another.

“If we really want to develop a fair and sustainable economy that includes both economic and productivity growth, we need to provide support to local businesses and SMEs instead of inviting multinationals to avoid paying their fair share of tax.”