Cut corporate tax to attract foreign investment: tycoon

By BRIAN FALLOW

Irish media tycoon Dr Tony O'Reilly has some advice for New Zealand if it wants to attract more foreign investment: lower corporate tax rates.

Addressing a business gathering in Wellington yesterday, Dr O'Reilly cited Ireland's decision to offer a 10 per cent corporate tax rate to attract foreign direct investment as one of the reasons for its transformation into a vibrant and prosperous economy.

"It's not rocket science. We were able to offer the lowest tax rate in the world because we didn't already have a large corporate sector, like Germany or France. You are giving very little away if you lower tax rates [in those circumstances]."

In remarks by turns jocular and pointed, Dr O'Reilly, executive chairman of Independent News and Media, which owns the Herald, quoted an Irish tax official's explanation for the country's stellar growth: "We have very computer-literate children, we have the lowest tax rate, 10 per cent, for corporates and, most importantly, we are robbing the Germans blind."

In the absence of Ireland's advantageous proximity to the European Union, New Zealand should seek to join the North American Free Trade Area.

It could also learn from Ireland's assiduous cultivation of the tourism industry, which attracts about four times as many visitors to its shores as New Zealand.

Asked if New Zealand placed too much emphasis on avoiding inflation, Dr O'Reilly said concentrating on any single variable, whatever it might be, would probably injure an economy.

A small degree of inflation was a lubricating factor, an underwriter of growth, he said. Ireland could tolerate the 6 per cent inflation it would reach this year.

"My overall impression is the sort of excitement evident in Ireland today is absent here. Oscar Wilde said a sense of impending gloom carries all Irishmen through long periods of tranquillity. He might have been describing New Zealand."