Creighton warns of No vote threat to tax rate

Wed, May 23, 2012, 01:00

THE CONTINUATION of Ireland’s low corporate tax regime and its access to borrowing would be put in jeopardy by a No vote in the fiscal stability treaty referendum, according to Government Ministers.

Minister of State for European Affairs Lucinda Creighton said yesterday that the 12.5 per cent corporation tax could be “put on the table” if the Government had to seek funds on the open market.

Speaking at a European Chamber of Ireland event Ms Creighton said Ireland would be leaving the EU/IMF funding programme in 2013 and would need to begin looking for funding from the markets in early 2014.

“Our tax is very much safeguarded and it is important to note that the only thing that could jeopardise our tax rate, potentially, is if we don’t have a source of funding when we exit our bailout programme in 2013,” she said.

The Minister said that if access to the European Stability Mechanism (ESM) was cut off by a No vote the country would be very exposed as it would be at the mercy of the markets.

“Corporation tax could very well be put on the table and we may not be in a very strong position to say ‘no’.

“If we cannot get all of the money we need from the markets we will need money from some form of stability mechanism and that won’t be available from the ESM if we don’t ratify the treaty, so it means the terms and conditions will be up for negotiation,” she said.

The Minister said other European countries that could potentially contribute to any fund we would draw from could put corporation tax into the mix, along with a range of other issues including high interest rates.

Speaking at an earlier event aimed at encouraging women to vote Yes, the Minister said that, while it was the Government’s intention to go back to the financial markets for funding in 2013, the State might need to access the ESM.

“There is a possibility that we would not be able to access the markets in 2013 and we that would face a funding cliff in 2014.”

She said the most important thing to consider in the context of the referendum campaign was the availability or otherwise of the ESM, “which we very well may need to access in 2013 and 2014”.

The ESM was “the only show in town when it comes to bailing out countries in the European Union from July on”.

The Fine Gael referendum director of elections Simon Coveney accused Sinn Féin of misleading voters by claiming that Ireland would have access to the ESM in the event of a No vote. He said the independent Referendum Commission had said only countries that had ratified the treaty would have such access.