Ireland's banking system is in trouble. As a result, it is in serious negotiation with the European Union and the International Monetary Fund looking for bailout help. Irish leaders have resisted raising Ireland's corporate tax rate (currently only 12.5%) as part of the deal - a provision the lending countries want to see to better guarantee a return on their investment.
PharmaGossip: Irish drug industry fears bailout tax terms.
However, the Irish Pharmaceutical Healthcare Association (IPHA) is vehemently against the hike. It notes (no doubt correctly) that Ireland has a strong pharma industry presence due to the low rates. In fact, 13 of the 15 top pharma companies in the world have at least one plant in Ireland. Ireland is the second largest exporter of medicines in the world.The IPHA warns that if Ireland raises taxes it will scare off more foreign investment in Ireland like the recent Puerto Rico tax hike is perceived to be doing now on that island.
The lenders, who favor the hike, must be banking on fact that companies would have a hard time moving their operations in the short-term - particularly the large manufacturing assets in place. But this owuld not hold for th emid- and longer term I'm sure as companies may well flee toward some of the pharmerging markets - especially if offered attractive tax incentives.
Posted by Bruce Lehr November 22nd 2010.
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