N.B. finance minister seeks Irish luck

Well, if Finance Minister Victor Boudreau is looking for Irish luck, then he should start by following the lead of the Irish. Through tax cuts, the land of pubs and drunks has been "miraculously" transformed into one of high-tech firms and entrepreneurs. Here's a good explanation from Alicia Hansen who is a staff writer at the Tax Foundation (I've added commentary and highlighted important text):

Ireland’s economy has undergone a remarkable transformation over the past two decades. A recent New York Times op-ed by Thomas L. Friedman attributes Ireland’s economic growth in part to the country’s low corporate tax rate (which I argued in the pre-budget submission has to be reduced to 10% in New Brunswick for us to be, at the very least, competitive with other jurisdictions).

Ireland is currently the second richest country in the European Union, with a per capita GDP higher than that of Germany, France and Britain. But in the mid-1980s, the economy was faltering, college graduates were emigrating, and the outlook was bleak (sound familiar NBers?):

"We went on a borrowing, spending and taxing spree, and that nearly drove us under," said Deputy Prime Minister Mary Harney. "It was because we nearly went under that we got the courage to change."

This change included a corporate tax rate cut to 12.5 percent, far below the rest of Europe, which attracted foreign investment. Nine of ten of the world's top pharmaceutical companies and seven of the top ten software designers currently have operations in Ireland.

In 2001 the Tax Foundation hosted a delegation of congressional tax staff on a European tax conference that included a meeting with officials from Ireland’s Industrial Development Agency, who explained that the corporate tax rate cut had stimulated economic growth and new foreign investment. Read Tax Foundation President Scott Hodge’s description of the trip.

While some of Friedman’s suggestions are debatable (for example, that free college education is conducive to economic growth), he accurately describes two important aspects of the Irish transformation:

[M]ake your corporate taxes low, simple and transparent; open your economy to competition … and you, too, can become one of the richest countries in Europe.

Click here for more on tax reform in Ireland and other OECD countries.

Moreover, this statement by Friedman, regarding Ireland success, hit home as well since New Brunswick's economy has suffered greatly for decades due to the inept policies of spendthrift, statist regimes:

Yes, the country that for hundreds of years was best known for emigration, tragic poets, famines, civil wars and leprechauns today has a per capita G.D.P. higher than that of Germany, France and Britain. How Ireland went from the sick man of Europe to the rich man in less than a generation is an amazing story. It tells you a lot about Europe today: all the innovation is happening on the periphery by those countries embracing globalization in their own ways - Ireland, Britain, Scandinavia and Eastern Europe - while those following the French-German social model are suffering high unemployment and low growth.

That's why I think it's imperative that the New Brunswick government change its economic course and form a strategy based on the three pillars of low taxes, debt reduction and smaller government. It's time that we seek the "courage to change" like the Irish, not their luck.