You know what annoys me? People who think that Ireland’s economic development success was only based on a tax cut.
Have a look at the 2005 annual report of the Ireland IDA.
I looked for you are here’s what I found:
• Total employment in IDA supported companies has increased to 132,728. The number of new jobs created during the year was 12,623. This was offset by job losses of 9,211 giving a net gain of 3,412, the highest gain since the year 2000.
Translation: The IDA has financially supported 132,728 jobs since its inception. See below for more on this.
• IDA supported companies spent €15.5 billion in the Irish economy in 2005 from their sales of €75 billion (exports of €71 billion) and paid €2.5 billion in corporation tax.
Translation: Taxes are lower in Ireland yes. But firms IDA attracted to Ireland paid 2.5 billion pounds in 2005 alone. That’s about $5 billion Canadian dollars. Economic development must lead to more taxes paid not less! Think about New Brunswick for a minute. Ireland is a country not a province but let’s say that New Brunswick attracted just 1/4 of the companies that Ireland did and created just 33,000 new jobs at 37k pounds. Using the same tax levels and structure (a leap but bear with me) that would mean over $1 billion per year in new corporate taxes (not including the massive amount of personal tax and HST). So, you would wipe out the majority of the $1.4 billion Equalization right there – with just corporate tax.
Certainly, you can shoot holes in this simple analysis but the theory underneath is valid. Ireland has a corporate tax rate of 12.5%. I think New Brunswick’s is slightly higher (not including of course the Federal tax rate). So, again, in theory, if you mimic Ireland’s success – adjust it for the scale difference between Ireland and NB and convert the taxes paid into dollars, you have $1 billion in new corporate taxes paid.
Now I have speculated in the past that corporations doing business in New Brunswick must somehow be paying their corporate taxes elsewhere – or a bulk of them. I have never got a straight answer on this when I have asked the question. For example, UPS has a 900 person operation in New Brunswick but I suspect pays no corporate tax here. Where do the Irvings pay corporate tax? How about the McCains? How about Walmart? Intuitively the amount paid by corporations is really low (and compared to other jurisidictions this bears out).
But I digress.
• IDA provides world-class business and technology parks in key towns throughout the country in support of its regional strategy. IDA spent €69.4m in 2005 on property developments, almost all outside Dublin and including the development of a number of major sites and business parks, to provide the basis for future growth in regions throughout Ireland.
Translation: This is amazing. The IDA actually builds business parks and buildings in some of the most poor areas of Ireland and then goes out and attracts businesses into them. They spend almost $140 million in 2005 alone on this endeavor. Yes, they are five to six times larger than New Brunswick in population but why don’t you ask BNB if they spent $30 million building new business parks and buildings in New Brunswick last year.
Average Salary in New Investments €37,000 (close to $70k Canadian).
Translation: Nuff said.
Cost per Job Sustained
Sorry this is so small but I wanted you to see the actual chart in the IDA annual report. Look closely, this provides the “The cost per job sustained is calculated by taking into account all IDA Ireland expenditure to all firms in the period of calculation. Only jobs created during and sustained to the end of each seven year period are credited in the calculations.”
That’s right all you AIMS folks that don’t read IDA annual reports. The Irish Development Agency paid, on average, 19,941 pounds per job for every job created between 1990-1996.
That’s on top of the tax cuts.
So you are free to disagree with government providing funds to support industry attraction. That’s your right. Just don’t throw up Ireland as some model of ‘hands off’ government just cutting taxes and watching the investment pour in.
Ireland spends upwards of $30k – $35k per job to attract companies in addition to having among the lowest corporate tax rates in the OECD.
Ireland spends tens of millions every year to build industrial and technology parks all over the country and then finds companies to move in.
IDA Ireland has 12 foreign offices to promote investment development: four in the USA, three in Europe, five in Asia-Pacific. New Brunswick has none.
University is free in Ireland until you are 21 years of age.