A SIGNIFICANT hike in the Republic's corporation tax rate would not be enough by itself for US multinationals to consider either pulling or deferring investment here, the US ambassador has told a business audience in Dublin.

Instead, other "costs of doing business" such as the cost of property, security of energy supply as well as the standard of transport, broadband and communications infrastructure, were being weighed up by US firms operating in the Republic, Thomas Foley told an Institute of Directors lunch yesterday. "For the majority of foreign multinationals . . . Ireland's low taxes are only one of many costs of doing business that they look at when deciding where to invest.

"It's a help, but it's not critical."

Mr Foley, whose diplomatic term ends next January and who notched up a successful private equity career in the US before joining the diplomatic service, said the accession of eight eastern and central European states to the EU in 2004 had helped to drop the average rate of corporation tax across the EU from 38 per cent in 1993 to 25.8 per cent in 2006, eroding the Republic's tax advantage.

The ambassador said businesses had factors other than tax and wage bills to consider when setting up or reviewing their presence in a country. "Real estate costs, both purchase and rental, used to be very low. This is no longer the case, as some rents in Dublin now compare with Manhattan."

A lack of a significant indigenous energy supply had left the Republic "particularly exposed to global shocks" in the energy markets and he was not confident, despite the efforts of policymakers, that investors would boost the shortfall in local capacity any time soon.

More positively, Mr Foley said the State's EU membership, common language and a lower-risk business environment compared to the dynamic but politically turbulent emerging economies of India and China, remained in its favour.

"Ireland has clearly lost some of the advantages it offered in years past, in particular, low costs including wages and rents, and much of its EU grants and subsidies. These advantages are unlikely to be regained."