ANTHONY COUGHLAN,
Sir, - The use of the Nice Treaty's "enhanced cooperation" provisions to harmonise company taxes in the euro zone and thereby strike at the basis of the Celtic Tiger economy is looked at askance by Peter Doyle, head of the European Commission office in Dublin (September 7th).
Nice's enchanced co-operation provisions, or, as I prefer to call them, its two-class, two-tier, two-speed EU provisions, are probably the most important thing in the treaty, politically and economically. They are the only provisions to be explicitly mentioned in the constitutional amendment that Irish voters must approve if Nice is to be ratified.
They provide the legal path to dividing the EU "club" into two clubs, so destroying the EU as the partnership of legal equals it has been up to now. They open the way to what former Commission president Jacques Delors has termed "a Union for the enlarged Europe and a federation for the avant-garde"; or what German foreign minister Joschka Fischer has called an inner-core "federation and government which, within the EU, should speak with one voice".
Ireland's low tax rate on company profits is the principal economic policy incentive we have to keep foreign capital in Ireland and to attract new foreign investment here. Because of it British politicians have called the Republic a tax-haven like the Cayman Islands.
Germany and France, with their high tax rates, want a level playing field for company taxes in the euro zone and want Ireland to raise its low, 12.5 per cent tax rate to remove the incentive for their own companies to move here. Statements by Messrs Schröder, Jospin, Lamy, Eichel and others on the importance they give to tax harmonisation in the EU may be seen by your readers on my organisation's web-site at www.nationalplatform.org.
At present each EU state has a veto on tax matters, but that veto goes with Nice. Under Nice's provisions for enhanced co-operation, eight or more member-states can harmonise taxes among themselves and use the institutions of the EU for that purpose, even if the others disagree. It has been suggested in the Financial Times and elsewhere during the past year that if Nice is ratified, these provisions on enhanced co-operation will be used to harmonise taxes in the euro zone.
States are not forced to take part in enhanced co-operation, as Mr Doyle says. Ireland may still opt out. But if all or most of the other euro zone states decide to harmonise company taxes, as is probable, the pressures on us to go along would increase hugely. The Irish Government has not been very good at resisting the pressure of the big EU states to re-run the Nice referendum. What price our resistance to tax harmonisation proposals for the euro zone under Nice's provisions for enhanced co-operation? If Ireland did resist and opted to stay out of such a development, we would be faced with becoming a second-class EU Member outside the core euro zone group.
Ratification of the Nice Treaty would thus face us with the invidious choice of either undermining a fundamental basis of Ireland's economic success, or being relegated to second-class EU membership status. Together with Nice's provision for removing the national veto on the rules of the EU structural and cohesion funds from 2007, by which time we will be net contributors to the EU budget, they make the economic reasons for voting No to Nice impelling.
On another issue, although Mr Doyle makes useful points in his letter, may I say that I find it surprising that a senior employee of the EU Commission should publicly enter our national debate on the Nice Treaty. It is almost certainly in breach of European law and protocol norms that the EU Commission, individual Commissioners such as Mr David Byrne, or Commission personnel, should intervene or spend EU resources on the Treaty ratification process of a member-state. The Commission is not a party to EU Treaties. It acquires functions in relation to them only after they are ratified. However, the Commission stands to gain a great increase in power from the ratification of Nice.
The EU Commission and its employees, pace Mr Doyle, are highly self-interested parties and I suggest that your readers should bear that in mind in weighing their words. - Yours, etc.,
ANTHONY COUGHLAN,
Secretary,
The National Platform,
Crawford Avenue,
Dublin 9.