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Google warns Irish government against tax increase

Published 20/11/2010

The Republic of Ireland's biggest US employers yesterday hit back at calls from Europe's big guns for a hike in the country's controversial low corporation tax rate.

The 12.5pc company profit tax is one of the lowest in Europe, and many countries, including France, Austria and Italy, have piled new pressure on Ireland this week to increase it in return for an IMF/EU bailout.

Google Ireland boss John Herlihy said that any move to increase business costs would damage Ireland's competitiveness.

"Anything that impinges on Ireland's competitiveness is going to be a big thing for Google, including corporation tax," Mr Herlihy said.

"And anything that increases the cost-base of a business is negative for competitiveness."

The world's most popular internet search engine employs 2,000 people at its European headquarters in Dublin and recently announced a 10pc pay increase for staff plus a Christmas bonus.

Mr Herlihy's sentiments were echoed by Intel, which employs more than 4,000 staff at its Leixlip plant, and the American Chamber of Commerce, which represents 600 US firms operating in Ireland.

While these firms benefit from lower company tax, they also employ almost 100,000 people directly and thousands of others in spin-off industries.

The Irish corporation tax rate is the third lowest in the EU-27 and the lowest of the 16 eurozone countries.

But this has long been the envy of other European countries where rates as high as over 30pc apply, as in France.

While government ministers insisted this week that it would not be touched as part of negotiations for financial support from the IMF/EU, opposition parties are more fearful.

Fine Gael will table a motion in the Dail next week calling for the rate to be maintained.

Party leader Enda Kenny said: "A low corporation tax rate is a cornerstone of Ireland's economy, and will play a crucial role in rebuilding the country."

Fine Gael introduced the low-tax regime in coalition government with Labour in the mid-1990s. So far this year corporation tax has raised over ?2.6bn for the Government coffers and is ?473m over target.

Meanwhile, IBEC welcomed a statement from the German government which said corporation tax policy is a matter for the Irish government.

A spokesperson for Angela Merkel said: "The German government supports the Irish government's policies and has great confidence in the courageous reform policies contained in the four-year programme it is expected to present in early December."

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