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The Macro-economic Impact of Changing the Rate of Corporation Tax

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  • Conefrey, Thomas
  • FitzGerald, John

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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Bibliographic Info

Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number RB2011/2/1.

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Date of creation: Aug 2011
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Handle: RePEc:esr:wpaper:rb2011/2/1

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Keywords: taxes;

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Cited by:
  1. 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, January -.
  2. Eoin O'Malley, 2012. "A Survey of Explanations for the Celtic Tiger Boom," The Institute for International Integration Studies Discussion Paper Series iiisdp417, IIIS.
  3. Callan, Tim & Savage, Michael, 2013. "Tax and Taxable Capacity: Ireland in Comparative Perspective," Papers RN2012/4/1, Economic and Social Research Institute (ESRI).

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