THE OPPOSITION Green Party in Germany has said further EU assistance to Ireland should be blocked “as long as it continues its tax dumping”.
Taoiseach Enda Kenny’s visit to Berlin to raise awareness of what Dublin and Berlin agree is Ireland’s “special case” has prompted some political demands for an Irish gesture in exchange for additional assistance.
“As long as Ireland pursues tax dumping there can be no money and no guarantees for the Irish banking sector,” said Jürgen Trittin, the Green leader in the Bundestag with ambitions to be Germany’s next finance minister.
“While Chancellor Merkel hesitates on a European banking regulator so as not to have to help Spanish banks, and demands Greek social welfare cuts, she declares Ireland a special case and raises the prospect of help without any quid pro quo.”
Politicians across Germany’s political spectrum see a link between banks lured to Ireland with the promise of low tax and their later collapse, followed by the EU-IMF programme.
In this narrative, using German taxpayer money for bailouts is politically unpalatable, particularly as the country enters a general election cycle.
“If anything it is Ireland’s tax dumping and lax bank regulation that damages other member states in a massive way,” said Mr Trittin.
Last week Social Democrat (SPD) Peer Steinbrück, challenger to Dr Merkel next year, said he favoured “corridors” to contain European tax rates.
A new SPD-Green coalition next September could thus see a hardening of attitudes to Ireland in the months before its planned return to markets.
The ruling CDU is less vocal on the tax issue as it does not favour a transfer of fiscal competence to Brussels. But, anxious not to leave an open flank, senior CDU officials in budgetary, finance and European affairs committees have confirmed this week that Ireland’s corporate tax rate is once more being discussed.
“Tax issues are national matter as long as you can pay your way,” said an official from Christian Democratic Union (CDU). “As soon as that’s not the case, and negotiations begin on assistance, it’s not surprising that something like Ireland’s low tax rate is put back on the table.”
The last round of European interest in Ireland’s corporate tax rate was the infamous “Gallic spat” between Mr Kenny and former French president Nicolas Sarkozy in March 2011.
The row over Irish demands for interest rate concessions and French demands for a corporate tax rate hike was settled without a concession from Dublin.
Mr Sarkozy’s successor, François Hollande, has remained silent on Ireland’s corporate tax rate, though the French Socialist party, like Germany’s SPD, was a vocal critic in the past.