Magazine article The Spectator

How to Cut Taxes and Get Rich

Magazine article The Spectator

How to Cut Taxes and Get Rich

Article excerpt

Dublin

Reticence is no more a national characteristic of the Irish political class than coyness is a natural attribute of British shadow chancellors. But Bertie Ahern has resisted boasting about the phenomenal success of the Irish economy while Oliver Letwin uses it to bait Gordon Brown. Like the Scots, the Irish are never happier than when beating England at anything, but when the Republic of Ireland's economy is shown to be outperforming the British, the most puzzling question is: why hasn't the Taoiscach (Prime Minister) called for a national day of rejoicing?

Yes, Bertie Ahern is a modest man with an occasional extravagance that runs to three pints of Bass, but he is a two-term Taoiseach - leading a coalition of Fianna Fail and the Progressive Democrats seeking a third in two years' time, so why is he so bashful about a truly remarkable achievement? A more assertive prime minister would remind a domestic audience that back in 1987 the Economist described Ireland as the 'Poorest of the Rich' and illustrated the report with an image of a beggar on the street. In 1995, when he was leader of the opposition, Ireland was struggling to make 19th place on an OECD table that ranked it fourth just four months ago.

Indeed, last May the OECD put Ireland ahead of Britain, in terms of Gross Domestic Product (GDP) in a table where the measure of income per head is adjusted for price disparity in the different countries to reflect what your income can buy. Another list ranked Ireland second to Luxembourg, and Britain seventh, in terms of wage earners' spending power in EU member countries. A recent UN table ranked the Republic of Ireland seventh in the world for inward investment after assets of $25 billion were delivered to Dublin last year.

Maybe Bertie Ahern is as ill at ease as many of his fellow countrymen at being constantly held up as an example to the latest EU recruits of how they too can prosper if they become exemplary Europeans. Ireland is also the fastest growing centre for fund management handling - 400 billion euros this year - and as visitors to Dublin's Temple Bar can testify, our teenage binge drinkers can go head to head with the best, even the Brits, on a 500-yard competitive pub crawl.

Still, it would be churlish for Mr Ahern not to give credit where it is due and Charlie McCreevy, who has served with his leader in cabinet for seven years, is the most successful, innovative and radical minister for finance in the history of the state. And if any individual can claim to be the progenitor of the mythical Celtic tiger, it is Mr McCreevy, who went against the advice of his departmental mandarins and proved that cutting corporation tax would actually increase the yield for the exchequer.

The Republic of Ireland has a corporation tax rate of 12.5 per cent; it is 30 per cent in the UK. The Industrial Development Authority (IDA), Ireland's job-creating agency, says that the tax regime is not the most important factor in persuading multinational companies to invest - a flexible, young, well-educated, English-speaking workforce is the number one lure - but a low corporation tax comes a close second. The IDA says that a stable political environment, where the mainstream Fine Gael and Labour parties support the current coalition government's corporation tax policy, is the third reason they believe Ireland has attracted so many foreign companies. …

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