ICT industry concerned at impact of tax row

28 Nov 2005

Technology lobby group ICT Ireland has claimed that the Irish tech sector could suffer if the debate over Ireland’s status as a “tax haven” escalates to the point where the US Government becomes involved.

Speaking earlier today at a press briefing to launch an ICT Ireland strategy document, entitled A Vision for Ireland 2006-2009, Michael Daly, general manager IBM Ireland and chairman of ICT Ireland, said that while he would be concerned if the US Government took an active interest in the issue, he felt that the whole tax debate was missing the point. “I have concerns that of all the benefits that Ireland offers, the only one being focused on is the tax angle and that’s incorrect.”

Daly argued that Ireland’s relatively low corporation tax rate of 12.5pc was only a contributory factor and “not the main reason” why multinationals invest in Ireland.

Hewlett-Packard Ireland vice-president Lionel Alexander agreed, saying that the computer maker, which employs more than 4,000 people at its facility in Leixlip, Co Kildare, could avail of even lower taxation rates elsewhere and the reason it invested in Ireland was to tap into the skills and creativity of a workforce that could reinvent and transform its business.

Emphasising the huge contribution made by the ICT industry to the Irish economy, including employment of 100,000 and €2.3bn in tax contributions, ICT Ireland director Kathryn Raleigh said a number of issues needed to be addressed if the sector was to continue to be successful. She described the skills shortage as being a growing problem that needed immediate attention by the Government if it was not to develop into a full-blown crisis. She said that while the economy would require approximately 7,000 additional engineers in 2006, the expected throughput would be “significantly below” that figure and there were already shortfalls in certain areas.

Raleigh noted that while ICT Ireland had embarked on a number of initiatives with the Department of Education and schools aimed at sparking interest in science and technology careers, the department’s successful transformation of the Junior Certificate science curriculum needed to be replicated at Leaving Cert level and beyond.

Paul O’Riordan, head of consulting at Oracle Ireland, said skills were a key component of what Ireland had to offer but that getting the right people would be the biggest challenge for the business over the coming years. “Whenever we needed pilot something or test something Ireland has never let Oracle Corporation down. I don’t think a lot of low corporation tax economies can offer this.” He added, however, that Ireland needed to increase its skills pipeline: “The quality of people is not an issue; the number of people is an issue.”

Iona Technologies co-founder and non-executive vice-chairman Chris Horn said the top concern of indigenous companies was having access to a steady stream of good engineering talent that would help them develop the products and services they needed to compete in a global market. Horn also said the Irish Government could help indigenous firms by investing more in home-grown technology, giving them “that first reference win” that was crucial to their success, especially in overseas markets.

By Brian Skelly