Rabbitte calls for freeze in corporation tax

The Labour Party leader, Mr Pat Rabbitte, has called on the Government to maintain corporation tax at existing levels this year in the face of an increasingly difficult set of economic circumstances.

Mr Rabbitte, speaking at a conference in Galway, said he understood that the policy was a competitive advantage for Ireland, but argued that it was necessary to put a freeze on a further reduction for at least a year given the present budgetary situation.

"I think in the present climate that consideration should be given to postponing that [reduction of corporation tax] for a year, because of the extent of the problems we now face," he said.

"Companies have a very good tax environment in Ireland and I think they could certainly afford to have this measure delayed for 12 months because of the economic crisis created by Bertie Ahern and Charlie McCreevy and their government."

The Exchequer is expected to be in the red by the end of the year with tax revenue €1.3 billion short of the Government's forecast.

The Minister for Finance has been forced to concede that he expects to borrow €750 million to balance the books.

Despite the economic gloom, last month the Tanaiste, Ms Harney said that corporation tax would not be raised to offset falling income tax revenue.

She insisted that there would be no delay in the plan by the Minister for Finance, Mr McCreevy to lower the rate to 12.5 per cent, arguing that "an important commitment has been given".