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The macro-economic impact of changing the rate of corporation tax

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  • Conefrey, Thomas
  • Fitz Gerald, John D.

Abstract

This paper considers the impact of changes in the rate of corporation tax in Ireland affecting the business and financial services sector. A model is estimated that relates services exports and output to world activity, competitiveness and the rate of corporation tax. This model indicates that a reduction in the rate of corporation tax in the 1990s stimulated exports and, even allowing for profit repatriations by foreign firms and replacement of lost tax revenue, it resulted in an increase in domestic output. The increase in profitability suggests that some of the increased output involved relocation of profits to Ireland by multinational firms.

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  • Conefrey, Thomas & Fitz Gerald, John D., 2011. "The macro-economic impact of changing the rate of corporation tax," Economic Modelling, Elsevier, vol. 28(3), pages 991-999, May.
    • Handle: RePEc:eee:ecmode:v:28:y:2011:i:3:p:991-999
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    1. Holger Görg & Eric Strobl, 2015. "Does Corporate Taxation Deter Multinationals? Evidence from a Historic Event in Ireland," The World Economy, Wiley Blackwell, vol. 38(5), pages 788-804, May.
    2. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide, 2010. "Recovery Scenarios for Ireland: An Update," Forecasting Report, Economic and Social Research Institute (ESRI), number jacb201051, march.
    3. Callan, Tim & Savage, Michael, 2013. "Tax and Taxable Capacity: Ireland in Comparative Perspective," Research Notes RN2012/4/1, Economic and Social Research Institute (ESRI).
    4. Mihaela NICOLAU & Nicoleta BARBUTA-MISU, 2011. "Aggregated Index For Modelling The Influence Of Fiscal, Financial And Social Policies On Enterprise Financial Performance," EuroEconomica, Danubius University of Galati, issue 5(30), pages 13-20, December.
    5. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide & Znuderl, Nusa, 2013. "The HERMES-13 macroeconomic model of the Irish economy," Papers WP460, Economic and Social Research Institute (ESRI).
    6. Duffy, David & Foley, Daniel & Mc Inerney, Niall & McQuinn, Kieran, 2016. "Demographic Change, Long-Run Housing Demand and the Related Challenges for the Irish Banking Sector," Book Chapters, in: Ireland’s Economic Outlook: Perspectives and Policy Challenges, Economic and Social Research Institute (ESRI).
    7. FitzGerald, John & Kearney, Ide & Bergin, Adele & Conefrey, Thomas & Duffy, David & Timoney, Kevin & Znuderl, Nusa, 2013. "Medium-Term Review: 2013-2020, No. 12," Forecasting Report, Economic and Social Research Institute (ESRI), number MTR12, march.
    8. Robert Kelly & Kieran McQuinn, 2014. "On the Hook for Impaired Bank Lending: Do Sovereign-Bank Interlinkages Affect the Net Cost of a Fiscal Stimulus?," International Journal of Central Banking, International Journal of Central Banking, vol. 10(3), pages 95-128, September.
    9. Bergin, Adele & Garcia Rodriguez, Abian & Mc Inerney, Niall & Morgenroth, Edgar, 2016. "Baseline: Methodology, Assumptions and Projections," Book Chapters, in: Ireland’s Economic Outlook: Perspectives and Policy Challenges, Economic and Social Research Institute (ESRI).
    10. Kelly, Robert & McQuinn, Kieran, 2013. "On the hook for impaired bank lending: Do sovereign-bank inter-linkages affect the fiscal multiplier?," Research Technical Papers 01/RT/13, Central Bank of Ireland.
    11. Bergin, Adele & Duffy, David & Foley, Daniel & Garcia Rodriguez, Abian & Lawless, Martina & Mc Inerney, Niall & McQuinn, Kieran, 2016. "Ireland’s Economic Outlook: Perspectives and Policy Challenges," Forecasting Report, Economic and Social Research Institute (ESRI), number EO1 edited by Bergin, Adele & Morgenroth, Edgar & McQuinn, Kieran, march.
    12. Shapir-Tidhar, Michal H. & Malul, Miki & Rosenboim, Mosi, 2023. "Tax structure efficiency: Introducing a new index," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 430-437.
    13. Fernández-de-Córdoba, Gonzalo & Torres, José L., 2012. "Fiscal harmonization in the European Union with public inputs," Economic Modelling, Elsevier, vol. 29(5), pages 2024-2034.
    14. Lawless, Martina & Morgenroth, Edgar, 2016. "Opportunities and Risks for Foreign Direct Investment," Book Chapters, in: Ireland’s Economic Outlook: Perspectives and Policy Challenges, Economic and Social Research Institute (ESRI).
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    16. Eoin O'Malley, 2012. "A Survey of Explanations for the Celtic Tiger Boom," The Institute for International Integration Studies Discussion Paper Series iiisdp417, IIIS.
    17. FitzGerald, John & Central Bank Staff, 2012. "The EU Financial Transactions Tax Proposal: A Preliminary Evaluation," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT217.

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    More about this item

    Keywords

    Corporation tax Ireland Services sector;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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