SPD to keep pushing issue of corporate tax in coalition talks with Angela Merkel’s CDU

The German Social Democratic (SPD) party will continue to push the issue of corporate taxation across Europe when government coalition talks with Angela Merkel's Christian Democratic Union resume on Monday, a key figure in the party said yesterday.

It comes amid signs that German resistance to retroactive debt relief for banks in countries such as Ireland is becoming more entrenched.

Norbert Walter-Borjans, finance minister for the state of North Rhine-Westphalia, said the SPD was not prepared to wait for the OECD to publish its recommendations on the issue of corporate tax avoidance, but wanted a “European solution”.

Europe's corporate tax structures have climbed up the political agenda in recent months following revelations that US companies such as Google and Amazon had exploited European tax systems – including Ireland's – to help minimise tax bills.

'Posturing'
Fianna Fáil leader Micheál Martin yesterday called on the Taoiseach and Tánaiste to tell the German parties within their European party groupings that "posturing on the future of Ireland's corporation tax regime is unacceptable and must stop".

Mr Martin said: “I am calling on the Tánaiste to travel to Berlin, meet his European party colleague [in the SPD] and make it clear that their demand to interfere with our corporation tax rate is unacceptable. Similarly, the Taoiseach should make it clear to Chancellor Merkel that we will not be co-operating in any way with any fudge on this issue.” The issue of taxation, as well as a commitment to give no further German public money to foreign banks, were key policy planks of the SPD’s election campaign.

During coalition talks with the CDU this week, the SPD explicitly linked Ireland's low corporate tax rate to the State's bid for further debt relief for Bank of Ireland and AIB from the euro zone's emergency fund, the ESM.

The centre-left party also wants Ireland to sign up to the financial transactions tax (FTT), an EU-initiative to tax certain transactions such as shares, bonds and financial derivatives. The FTT concept has lost momentum in Brussels in recent months after only 11 European countries signed up to the proposal, and the European Court of Justice ruled last month that the tax was unlawful.

Revived idea
However, the SPD has revived the idea, suggesting that the FTT, which would be paid for by banks, should be used to fund the proposed euro zone bank resolution fund designed to help banks in trouble.

The question of how euro zone countries should handle future bank collapses will feature at next week's meeting of finance ministers in Luxembourg, with Germany fiercely resistant to any plan that would lead to a "pooling" of responsibility.