The sole Big Four representative on Ireland’s new Commission of
Taxation is to focus his efforts on ensuring the country retains a
low corporate tax rate and exploring the feasibility of a carbon
tax regime.

PricewaterhouseCoopers Ireland technology, tax and legal
services partner Feargal O’Rourke said the low corporate tax rate
is a key part of what he has dubbed the “attractiveness index” of
tax matters that foreign investors look for when deciding to invest
in Ireland. “The low tax rate is what everybody focuses on who is
coming to look into Ireland,” O’Rourke said. “If you look at
Ireland and you say, well we speak English, we have a well-educated
work force, but the low tax rate is the key to that

Feargal O'Rourke, PwC IrelandO’Rourke, who has more than 20 years’ experience advising
multinationals in Ireland, is also interested in the notion of
carbon tax, which he said represents a whole new regime for tax
practitioners: “We have had income tax since 1798, or thereabouts,
we’ve had corporation tax in some shape or form for many years,
we’ve had capital gains tax for 30-odd years, inheritance tax for
30-odd years. We now have a whole new tax regime coming in on
carbon tax and how that will interact with business and businesses
is something I’m quite interested in,” he said.

Economic lever

O’Rourke said he views taxation as having two roles. “One is
obviously to raise revenue for government expenditures and the
other, which you see quite a lot of in Ireland, is to encourage or
discourage certain economic activities. I think carbon taxation
definitely falls into the latter category.

“It is not really about raising revenues, it’s really about saying
‘if we as a nation are committing to maintaining and reducing
carbon emissions over the short- to medium-term, the tax system is
one of the codes that will be used to do this’. You are saying ‘how
do we introduce a system that encourages businesses to actually try
and reduce their carbon emissions?’… and, for those who don’t,
[you] impose a tax on them, of which the proceeds presumably will
reduce the burden on those who are reducing their emissions.”

The Irish Minister of Finance established the Commission of
Taxation to review the structure, efficiency and appropriateness of
Ireland’s tax system.

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The commission, due to report back to the government in September
2009, will focus on a set of tasks, which include:

• Keeping the overall tax burden low and implementing further
changes to enhance the rewards of work while increasing the
fairness of the tax system;

• Ensuring the regulatory framework remains flexible, proportionate
and up to date;

• Introducing measures to further lower carbon emissions and to
phase in on a revenue-neutral basis appropriate fiscal measures,
including a carbon levy over the lifetime of the government;

• Guaranteeing the 12.5 percent corporation tax rate will

The commission will be operating from the position that Ireland has
“quite a successful economy, a pretty positive view of the revenue
commission and a pretty good tax system”, O’Rourke said.

He added that Ireland had a Commission on Taxation in the
mid-1980s, which made a series of recommendations that the nation
did not have the required wealth to implement at the time.

“It’s sometimes easier to implement changes in a rising tide,
because there are maybe things that have cost to them, or
short-term cost, and in a rising tide you can sort them out.
Ireland did not have a rising tide in the mid-80s,” O’Rourke

He said that today the Ireland’s economic situation is much
stronger: “In a sense we are [now] dealing from a position of
‘we’ve got a lot of good things here, let’s try and enhance and
improve the tax system as much as we can’.”