THE MINISTER of finance for the Netherlands has thrown his weight behind Ireland’s sovereign entitlement to decide its own tax rates – including its right to retain its corporate tax rate at 12.5 per cent.
In The Hague last night, Jan Kees de Jager told The Irish Times: “Direct taxation is a matter for individual member countries themselves. EU member states have a right to decide what level of taxation is appropriate in each individual area. That is why we do not specifically argue that the corporate tax rate should be increased in Ireland.
“It is a matter of national sovereignty whether or not to increase a specific form of tax, though, of course, the total level of taxation must be appropriate to finance government expenditure.”
The comments from the Dutch minister are a boost to the Government at a time when France and Germany are insisting that Ireland should increase the 12.5 per cent rate, a demand which President Mary McAleese last Friday described as “a nonsense”.
Last night the comments from Mr Kees de Jager were welcomed by Minister for Enterprise Richard Bruton, who is in the Netherlands as part of an Irish delegation accompanying President McAleese on a two-day official visit.
Mr Bruton agreed with Mr Kees de Jager that “all taxes are a matter on which individual governments have a right of veto”.
He described the 12.5 per cent corporation tax as “an essential element of Ireland’s export strategy”, and said it was crucial to provide investors with certainty about taxation.
“We must explain this; it is not just a matter of beggar your neighbour,” he said.
Mrs McAleese had said earlier in the day that Ireland’s economic recovery was already under way, led by a resurgence in exports and driven to a significant extent by a beneficial tax regime.
Without referring specifically to the controversy over the demands by France and Germany for an increase in Ireland’s corporation tax, she also issued a strong reassurance that Ireland’s commitment to the EU remained strong.
“The Irish love affair with Europe has not dimmed – though it has matured,” Mrs McAleese said in the keynote speech to a dinner attended by Dutch political and business leaders in The Hague.
“Surveys still show the Irish amongst the strongest supporters of the union, and we acknowledge the vital support which Europe is providing to us at the moment.”
In a carefully nuanced address, she said tackling the economic crisis depended on effective responses at both European and national level.
“We recognise our responsibility to work together to address the distortions and imbalances which have been created, particularly in the financial sector.
“Our common currency, the euro, is fundamental to our economic wellbeing, and we are all committed to ensuring that the right decisions are taken to preserve and secure the enduring health of our monetary union.”
The President also told a lunch in Amsterdam hosted by the IDA, Bord Bia and Tourism Ireland that foreign direct investment in Ireland had increased significantly over the past 12 months – creating almost 11,000 new jobs.