Some time ago this columnist called on Taoiseach, the office of the Irish prime minister, in Dublin. Ireland had an unsurpassed record of economic performance in Europe. This visit was an effort to learn why. Many explanations were forthcoming that could serve as object lessons for Canada.
First and foremost, Ireland does not tax capital gains. When questioned why that tax was eliminated, the response was that there would be more capital to invest in other entrepreneurial projects such as pharmaceuticals and innovative technology.
Also, agreements were reached with other jurisdictions so that any enterprise leaving the Republic of Ireland for other countries would not owe any capital gains tax and an incentive for investing in other money making opportunities.
In addition, in Ireland, corporate taxes were kept low at 25% compared to 38% here. Businesses were able to capitalize on these low rates. Then the Irish Government encouraged the Bank of Ireland to keep currency transactions low, unlike here, where our banks charge a sizeable fee to convert funds to Canadian currency. Worth noting also is that gasoline and electric power taxes were kept at levels relatively low by European standards.
The Irish government made a point of keeping all regulations to a minimum for business operations. Ireland believed that government intervention in the economy, even in a recession, should be at a minimum as, sooner rather than later, in the natural order of events, a business recession would entail lower costs, which would help revive the economy. Labour, and other inputs, would become more attractive and business resurgence would ensue. There would be an almost automatic reaction as the lower taxes and costs would kick in, sparking a relatively strong economic recovery.
Alongside of less government intervention, the Irish government also reduced excessive spending to buoy up its economy. Clearly, these measures attracted foreign investment and travel to Ireland, evidenced with positive results. By eliminating taxes, as outlined above, and lower input costs, these always induce a business turnaround, which has been shown repeatedly. These steps encouraged investment by other nations in Irish companies.
It should be recognized that these cost reductions tremendously encouraged business to flourish in Ireland and by their good example, why not here?