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LEO VARADKAR TO DONALD Trump: “You know that claim you made about our corporation tax rate? Well, it was ‘fake news’”.
That was essentially what the Taoiseach said in the Dáil two weeks ago, using Trump’s own catchphrase (and new addition to the Collins Dictionary) to mock a speech the US president made in the White House’s Rose Garden where he name-checked Ireland.
“You look at other countries and what they’ve done, and we’re competing with other countries,” Trump said. “When China is at 15% and I hear that Ireland is going to be reducing their corporate rates down to 8% from 12%,” said Trump.
The Department of Finance strongly denied Trump’s claim and when the Taoiseach was asked about it, he simply replied with a grin on his face:
It is indeed fake news.
Fast forward a couple of weeks and Varadkar is stateside, wooing US tech companies with talk about their connections to Ireland, with an added dash of Irish malarkey, just to keep the US business punters on side.
The former Taoiseach Enda Kenny was often criticised for playing up to the Irish stereotype with US business and political leaders.
While Varadkar may not be as obvious about it, there are of course the Irish references thrown into the odd speech which he knows the Americans will lap up.
Speaking in San Francisco City Hall, Varadkar said:
In the nineteenth century, Frank McCoppin from Longford became your 12th Mayor was, and in the early twentieth century Patrick McCarthy from Limerick became your 26th. And since then there have been several Mayors of Irish descent.
In so many ways the Irish have helped to build and support this city, and that continues right to the present day.
While in a speech to a business dinner in Seattle, he said:
In one of the earliest histories of this region, this place was described as ‘a beautiful park set amidst a grove of trees’. And of course it owes its name – and its origins – to two Irishmen in the 1850s who were inspired the small village in Co. Galway which they had left. Today the friendship between the two Menlos is as strong as ever, and the warm feeling of connection and kinship extends to the rest of Ireland.
Just enough Irish ancestry talk to keep American eyes smiling.
But the Taoiseach has been received well by the Irish in America.
One business person attending one of Varadkar’s events said that to have a gay Taoiseach who is son of minority parents representing Ireland “in this political climate is amazing, for either Fine Gael or Fianna Fáil – it’s an awesome message”.
Trade mission
How are such trade trips regarded by Donald Trump?
The truth is, Trump does not like for one minute that US companies are choosing to locate in Ireland to take advantage of our generous corporation tax rate.
Leaving aside the argument about whether it’s morally right for large conglomerates to avail of low taxes in Ireland, the fact is the US president has Ireland in his sights, and has referenced the country quite a few times in relation to our 12.5% tax rate.
The US president has said America has lost its competitive edge, and that he is willing to lower the corporation tax in a bid to get businesses to stay in the US. He’s also threatened to slap fines on businesses that choose to take business outside American borders.
Leo’s photo-ops with America’s leading tech leaders are sure to rub Trump the wrong way.
First it was a meeting in Microsoft in Seattle, where the Taoiseach pointed out that he was just six years old when the company set up in Ireland. That was 32 years ago and the company now employs 3,000 people in Ireland.
It was then on to Facebook, where the Taoiseach posed for another photo with the company’s founder Mark Zuckerberg, while also announcing the company is going to hire hundreds of additional staff in Ireland.
It was then on to Google where the Taoiseach said he met with some “Irish Googlers” as well as senior executives. And finally, it was on to a meeting with Apple’s Tim Cook.
The Taoiseach was quick to point out that the company employs over 5,000 people in Ireland, though it wasn’t all good news – there was speculation that the Apple data centre in Athenry, which was held up due to planning permission objections, might be at risk.
It is serious business though. Ireland has been named the best country in the world for attracting high-value foreign direct investments for the sixth year in a row.
Such companies bring in a massive amount of revenue to the country, and often create hundreds of jobs. That’s often used as a reason to keep Ireland’s tax rate low – although many would argue we are letting these conglomerates off too easy, while the ordinary taxpayer is left with a greater burden.
But the truth is, with Trump threatening to clamp down on American companies investing abroad and promising to make the US corporation tax rate more attractive to businesses, Varadkar knows he must keep the big players sweet.
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We have known about this patent cliff for years, yet we have supported generic products who do not engage in R&D. The downside of that is that large Pharma companies are not investing in NPD because of falling revenues and we have no new drugs to take over. We have done nothing to encourage R&D and we are going to pay a heavy price unfortunately.
The pharma companies are not sleep walking into this and have been living with this kind of thing as part of their normal business risks for years.
The good ones will be bringing replacement product on stream and selling the patent rump to generic manufacturers as they free up capacity for new product.
It is a well trodden path
“with the country’s pharmaceutical industry currently generating 50 per cent of the total amount of the nation’s exports”
Merchandise exports, not total exports. Ireland is ahead of the curve internationally in switching to services exports (software, consultancy, financial services, etc) and they now constitute 50% of all exports, so pharma is – after some simple multiplication – about a quarter of total exports.
This is a relatively serious issue, not because it is unexpected or even because of the effect it will have on our export statistics, but because of the effect it will have on (a) corporate tax revenues, and (b) FDI decisions by pharma firms in relation to existing and new plants.
Don’t forget that there is also a generic pharmaceutical industry in Ireland that provide people with affordable medicines. Some of those people could not afford the medicines when it is not generic!
When I was in college I did my work placement with Eli Lilly and it was an amazing place to work. They really look after their staff; the (very subsidised) canteen was award winning and as good as any restaurant. They threw a big party for everyone’s kids at Christmas and gave them Easter eggs as well. They really do everything they can to provide a safe working environment; with schemes such as flexi time (where possible) and of course employees are well paid.
These are exactly the kind of employers we should be supporting/keeping in this country.
@Patrick The Cipramil/Lexapro, Losec/Nexium, Clarityn/NeoClarityn trick has been closed by European regulators.
Overall, this is not a huge issue as Pfizer bought Wyeth recently, as the latter have a better “pipeline” of new drugs coming to the market. Pfizer would have negotiated the price for Lipitor which allowed them to cover the costs of developing it. If they had spent the money on developing new products rather than on marketting, they might not be in the position they are now.
Anyway, can we see real figures of what is contributed to people and the economy, rather than the not very informative figures of what value was exported?
So do you not just alter the drug ingredients slightly, give it a new brand name, work the marketing magic and take out a patent on the new brand and you’re away again ?? Example is Cipramil which is now called Lexapro because the patent ran out. So the manufacturer used a different binding agent in the drug, put it in a new box and off they went again with a “new” product and a new patent. I’m sure there might be a few sweeteners offered to doctors as well to prescribe the new named drug ! So for these reasons I don’t see the expiration of some patents being much of an issue really. It’s cheap labour in Asia that’s more of a worry where major manufacturers move their entire operations over to India or somewhere at a fraction of the cost.
No this is now not allowed. It used to be but unless it’s a completely new formulation the FDA and EMEA will not grant licenses.
When we talk about Pharma exports being a quarter of our total exports…
…how much of that is real exporting and how much of that is part of the double Irish tax dodge?
More of a question than a comment but can patents not be extended?
A normal patent gives you 20 years. You can apply for an extra 5 years in special circumstances i.e. drug companies. Assume that all this has been well researched by whoever owns the rights to Lipitor
You can. The makers of Prozac extended their patent by inventing a new disorder based on PMS. They then made the pills pink, whacked the price up 300% and called it “serafem”. They also marketed it to dogs as “reconcile”.
Check out the documentary “Big Pharma, Big Bucks”, it explains it all :)
Here is another question, how much does the hse spend on these companies products each year?
a good few of the companies are/will merge with other larger companies so it is a concern that the patents are coming on stream but the industry is adaptable !
have your say