Sad day for Ireland, says ex-taoiseach

Former taoiseach and European Union ambassador to Washington John Bruton today described the arrival of EU and IMF officials to the State as a “very, very sad day for Ireland”.

The former Fine Gael leader said the country’s long struggle for independence and sovereignty was made on the basis that “we would make all the decisions on spending and taxation ourselves, on our own”.

“We’re now in a position where we’ll still be making the decisions but we won’t be making them on our own, we’ll have others looking over our shoulders,” he said.

“The credit of the Irish Government and the ECB was not sufficient to give confidence to the banking system and now we are going to have to enlist the credit of the governments and taxpayers of the other countries of the European Union and of the world through the EU and the IMF to underpin the credit of the Irish banking system.”

"This is a very serious state of affairs," Mr Bruton told RTÉ Radio's News at One. "However, if we show purpose and speed in making the decisions that need to be made about our revenue and expenditure, we can regain, quite quickly, full control of our own affairs and that must be our objective as a country."

Asked how big a say the IMF would have in the upcoming budget, Mr Bruton said: “I think they’re going to be involved in all of the decisions.

“They will want to assess that the projected revenue from a particular measure or the projected saving from a particular cut in expenditure this year is going to carry through into subsequent years. One of the problems with budget making in other countries is that the figures haven’t been honest or realistic and I think they’re going to be looking over our shoulders to make sure our assumptions are correct,” he said.

Commenting on concerns the State’s low rate of corporation tax would be removed as part of any rescue package, Mr Bruton said it would be “counter-productive” for other states, who wish Ireland’s debt to be repaid, to take away its best source of revenue.

He said corporation tax was the one tax that had exceeded Department of Finance projections for the first 10 months of the year, delivering €300 million more to the State's coffers “in bad times” than was expected.

“In all other tax categories, we have been below par or at par, corporation tax brings in money. The low rate would help the State repay its debt to the international community quickly,” he said.

Mr Bruton said there were other areas of taxation that could be looked at, pointing out that the average Irish family pay about half as much tax as the average German family on the same income.

Asked how long he thought the State would have to remain under the sway of its new debt masters, Mr Bruton said because the problem was part of an overall supply issue on the international sovereign bond markets, it was difficult to predict. "I would hope two years at most but who knows," he said.