Dr. Eddie Casey:

If I can plug some of the very good recent work that the ESRI has done on this, it looks at potential impacts of raising corporation tax rates. It highlights two really interesting points. First, one of the only areas on which Revenue does not provide an estimate is how much any change in the corporation tax rate would raise. That we do not know what kind of impact a change in the corporation tax rate would have has highlighted the level of uncertainty in this regard.

The second area highlighted in some very good and complex work done by Professor Ronald Davies and others in University College Dublin, UCD, is the probability of future FDI flows coming into Ireland if we were to change the rate. Professor Davies suggested that a 1% increase in the corporate tax rate would reduce the probability of Ireland being chosen as a location for new FDI from outside the European Union by 4.5%. This gives us a sense of what could happen. However, because things are so concentrated in a handful of very large companies, it is hard to say that this is exactly what would happen or this is the behaviour we could see in future.