To ensure Ireland's continued economic growth, we should introduce tax measures that encourage indigenous innovation, writes Brian Deegan

WHATEVER YOU may think about the National Development Plan, it's hard to argue with its emphasis on scientific innovation as a key component in fostering continued economic growth.

Ireland has had great success in attracting inward investment, and there have been significant achievements in recent years in developing our services. In addition, we have never been better at encouraging a generation of entrepreneurs and risk-takers.

Tax policy has played a major role in developing inward investment. Using the tax system to stimulate the economy is legitimate, even if only because it is one of the few tools still available to the Government in the absence of the other traditional controls of exchange rate-policy and interest-rate management.

We have not, however, used our tax system to any great degree to generate indigenous innovation and the scientific skill set which is fundamental to the idea of a modern knowledge economy.

With growth stifled, not only because of domestic conditions but because of international trends resulting in less available energy and capital, we may need to relinquish our approach of recent years of being "best competitors". We need to become "best improvers" again, reapplying the same thought processes that brought us the International Financial Services Centre, the reduced corporation tax and capital gains tax rates, and the investment that flowed in our direction as a consequence.

We must become a global centre for innovation, where international experts come routinely to work and interact with their peers. Without such a deep scientific core to our education and training, industries based here will be over-reliant on outside support.

Tax measures are needed to encourage both our own highly- trained people and leading foreign experts to work, teach and develop new technologies in Ireland.

To succeed, these measures will require the will on the part of Government to apply positive tax discrimination towards people with high qualifications in areas such as health, food and energy research which have been already identified as priorities in the Strategy for Science, Technology and Innovation.

This encouragement must be implemented in both the commercial and education sectors.

The logic behind this is simple: if we can attract leaders in their respective research fields to Ireland, we can develop those fields of expertise to the benefit of all.

It is no longer sufficient to have the implementers of someone else's thinking located here. We need the innovators themselves to develop, train and lead locally.

The world leaders in innovation are commonly seen as including the US, India and Israel. Ireland needs to be part of this list.

• Brian Keegan is director of taxation with the Institute of Chartered Accountants in Ireland