View from Dublin: Republic shouldn't be worried about Trump's tax hope
US president Donald Trump has name-checked Ireland in a list of countries with low corporation tax rates. He isn't happy about America's trade deficit with countries like Ireland. He says he is going to change all that. Should we be worried?
Not really, is the answer. US corporation tax is in need of reform that may involve reducing the rate, but it is not likely to be enough to seriously undermine the investment rationale of major US companies here.
The headline rate is 35% and Trump says he wants to get that down to around 15%. Firstly, he hasn't a hope. Some estimates have suggested that a cut like that would cost the US exchequer over $2.3 trillion (£1.8 trillion) in a decade.
Corporate taxes of US companies contribute around 10% of America's total income or $350bn (£270bn).
Reform is a different matter. He could re-jig the tax system to incentivise companies to create more jobs in America. Equally, he could give a once-off reduction in tax payable on the $2 trillion held in profits overseas by American corporations. A study by the Institute on Tax and Economic Policy found that in reality American companies pay around 22% in corporation tax and reducing the rate would not necessarily lead to the creation of new jobs.
If that analysis is correct, it suggests the risks of losing jobs is less.
Trump looks short of the credibility or unity of purpose required to secure a major new tax reform package, even if it is long overdue. Trump is more likely to land a missile in Pyongyang than an across-the-board 15% corporation tax rate in the US.
The bigger risks for Ireland may be closer to home, weakening competitiveness, a new two-speed EU and Brexit.
Speaking of Brexit, the uncertainty rumbles on but two Irish companies likely to be affected delivered solid-enough results during the week. A fall in sterling is affecting tourist visitor numbers to Ireland but ICG reported higher passengers numbers in the first half of this year. Perhaps the balance is shifting towards Irish people heading east instead of British heading west. Either way, ICG carried 700,000 in the first half of the year, 12,000 more than the same period last year.
Passenger numbers were up 1.7% while car numbers were up 2.3%. While sterling weakness is an obvious drawback, and it has shifted 9.2% in the wrong direction, low fuel prices are evening things up. Brexit swings and roundabouts are all around.