Irish Congress of Trade Unions

Ireland has been an innovator in using taxation as a tool for industrial policy, by attracting foreign direct investment (FDI) with low taxes on corporate profits. This article outlines the background to how this policy evolved and the advantage it was to building up Ireland’s industrial base during the 1990s as well as how it contributed to building the ‘Celtic Tiger’ economy from 1994 to 2000. It argues that, since EU enlargement in 2004, the advantages of using low corporate tax rates to attract FDI have diminished, even though ‘official’ and ‘corporate’ Ireland continue to promote this policy and to obstruct any EU-level moves to coordinate corporate tax. The room for manoeuvre is closing and it is argued that Ireland needs to develop alternative strategies and to engage seriously with its EU partners in finding agreement on a common corporate tax base.