Berlin MPs to play down Irish chances of debt relief

Ireland can expect no further debt relief from its EU partners unless it shows readiness to reform its corporate tax system, German finance politicians will argue today in Dublin.

Members of the Bundestag finance committee, visiting until Wednesday, have suggested that naming the investors who benefited from EU-IMF bailouts in Ireland and elsewhere would boost the chances of further European debt relief.

"Right now, nobody is talking about legacy debt in Germany and I would expect that the idea of sharing part of the Irish debt burden is not popular with German taxpayers," said Dr Gerhard Schick, a senior deputy with the opposition Green Party and deputy head of the Bundestag committee.

Greater transparency

“We need greater transparency,” said Dr Schick, who is leading the delegation to Dublin.

"Naming the creditors who were assisted [with the EU-IMF bailout] would assist the discussion in Europe for further debt relief."

During their two-day visit, the committee will hold talks with Government officials and TDs about the recent EU-IMF bailout, with the Irish side expected to air outstanding financial expectations.

Berlin has rebuffed Irish calls for further financial concessions, such as investment from the ESM bailout fund to replace state investment in nationalised banks, until they are satisfied by the operation of the so-called banking union, with powers to regulate and wind up European banks.

In addition to political meetings, the German visitors will hold talks with economists, officials from Nama and the financial regulator.

Dr Schick said his committee had many questions about post-crisis reforms of the regulator and the rise of the so- called shadow banking sector. Some estimates say this sector of brass-plate and letter-box banks is worth €1.7 trillion – more than 10 times the worth of all products and services the State produces in a year, ie the gross national product.

“It’s unsettling the ideputyression one gets from press reports that everything is continuing as before in Ireland, but in the shadow banking sector rather than the banking sector,” said Dr Schick.

Tax arrangements

Irish officials are likely to face close questioning from the visiting German deputies on tax arrangements for Apple, after Ireland was one of three countries targeted by the European Commission in a tax investigation launched last week.

The Green Party deputy said he noticed that German criticism of Ireland’s tax affairs was no longer limited to the political left but had spread across the political spectrum.

“I have the impression that, after the successful work to effectively end banking secrecy in Europe, attention is now turning to corporate and capital gains tax,” said Dr Schick, pointing to ongoing talks at the Organisation for Economic Co-operation and Development on tax affairs.

Rather than fall back into familiar national squabbles on tax competition, Dr Schick has called on EU member states to ask bigger questions, such as why tax rates decrease for businesses the larger the entity being taxed.

“Support for the European internal market will drop,” warned Dr Schick, “if smaller companies and employees have the impression they are shouldering more and more of the tax burden.”