Ireland's economic miracle was the result of excellent education including free university -- and aggressive government involvement, as much as low corporate taxes, a leading Irish businesswoman says. Once an economic backwater, Ireland has led the developed world in
growth over the past several years, driving its chronically high unemployment level down to
5 per cent and raising its national income per capital to the point where it is second only to
Luxembourg in Europe.
In Ottawa yesterday, Vivienne Jupp, a partner with Andersen Consultants and chairwoman
of Ireland's Information Society Commission, played down the common perception in North
American that the country's success was largely the result of low taxes.
Rather, she credited a government-led social contract that created the framework that attracted a huge influx of high-technology investment. That contract included the reduction of corporate taxes to the lowest in Europe at 12.5 per cent, but not, she says, at the cost of education or other social safety nets. "The tax issue is one aspect of the story, but I think it is a long way from being the
primary aspect of the story," Ms. Jupp said in an interview after addressing a conference on electronic commerce.
"The other aspects of the story are the educational system in Ireland, which has been recognized as being of a very high standard, and a social partnership program which we pursued in Ireland which has the government, the employer, the unions and the voluntary social sector all working together to determine what framework work should progress in."
In fact, Ms. Jupp noted that Ireland still has relatively high personal income taxes and a value-added tax -- like Canada's GST -- of 21 per cent. "It is not a low-tax jurisdiction. I would never describe Ireland as a low-tax jurisdiction," she said. "Personal income tax is quite high."
Instead, corporations like Microsoft and Dell Computer were lured to the island nation with tax breaks and grants, and the promise of a well-educated, highly flexible, English-speaking work force. At the same time, a number of indigenous high-tech firms thrived, including Internet
security firm Baltimore Technologies Ltd.; TrinTech Ltd., a maker of credit card processing equipment; and SmartForce, a computer-based training company.
And Ireland resists the brain drain that has plagued countries like Canada by offering well-paid, good-quality jobs in a country that has a high quality of life, she said. In fact, for 160 years, Ireland's main export has been people, but now, the country is not only retaining its highly-skilled young people but also attracting Irish émigrés and their children.
The Information Society Commission, which Ms. Jupp chairs, is a public-private body that is promoting the use of the Internet throughout the country, including providing Internet service to schools, smaller communities and unemployed individuals. The commission has also sponsored training programs for unemployed workers, which provided them with computer-related jobs.
Not all the work is high-skill. Lured by generous tax breaks, offshore companies have also located their European call centres in Ireland. Ms. Jupp conceded that part of Ireland's success can be attributed to the generous subsidies from the European Union, which have flooded into the country since it joined the then-European Commission.
"But I think we've made very good use of the money that we've got from the European Union," she said. "The sense in the European Union is that you invest in the countries that need investment and, as a result of that, a rising tide will raise all ships." She added Ireland is now poised to become a net contributor to the EU.
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