Government leaders tout tech policies

By Margaret Johnston, IDG News Service |  Business

FAIRFAX, VIRGINIA -- In Dublin, the "Celtic Tiger" economic success story has been based in part on "less is more," while the U.S. technology industry has matured to the point that it now needs high-level representation in Washington.

These messages, delivered by Irish and U.S. government leaders Wednesday, rounded out the final full day of the 2001 Global Internet Summit here. The gathering, co-hosted by the state of Virginia and Cisco Systems Inc., and sponsored by a number of technology companies, drew representatives of an estimated 40 countries and 700 attendees.

Mary Harney, Ireland's minister for enterprise, trade and employment, said Ireland has reversed its fortunes over the past decade largely thanks to technology and government policies that are favorable to IT companies. Among them are lower tax rates on business profits and lower income taxes. Businesses will pay only 10 percent tax on profits through 2010, Harney said, while income tax is down to 20 percent for average earners.

The 10 percent tax on business profit is about one-third the average charged by other European governments, yet it delivers about 12 percent of all government revenue in Ireland compared with 5 percent in other European Union countries.

"So a third of the rate delivers about two-and-a-half-times the take," she said. "We have in Ireland, I think, learned of the incentive power of low taxation."

The Irish government also believes in the principle of allowing people to take home more of what they earn, she said. Low tax has generated unprecedented revenue for the country, in contrast to the huge budget deficits and having to borrow, tax and spend as it sought to do in the 1970s, Harney said.

The country has enjoyed nine years of sustained economic growth, including 8 percent annual growth over the last four years. Its unemployment rate has dropped from a high of 17 percent to 3.9 percent, and instead of losing 40,000 people to emigration annually as has happened in the recent past, an estimated 45,000 people move to Ireland annually, half of them returning Irish.

A technology-fueled economy is part of the reason, as well as close cultural and linguistic ties to the U.S. Ireland has become the world's largest exporter of software, according to Harney and attracts about 25 percent of all U.S. investment in Europe, even though its population is less than 1 percent of the total European population.

But Harney maintained that Ireland had to work to get where it is. The country plotted a course that included a 40 percent increase in investment in education over the past three years, a light regulatory approach and investment in infrastructure.

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