Cowen repeats oppositionto EU tax harmonisation

Tánaiste and Minister for Finance Brian Cowen has reiterated the Government's opposition to EU corporate tax harmonisation, saying he was committed to maintaining Ireland's current corporate tax rate as a means of attracting investment.

Speaking at the launch of a report entitled Who's Afraid of the ECJ? - Implications of the European Court of Justice Decisions on Ireland's Corporation Tax Regime, he said he had noted the connection drawn in the study to the European court's rulings in the direct tax field and the pressure to move towards EU tax harmonisation.

"Ireland opposes corporate tax harmonisation as a matter of principle. We have seen from experience that low tax rates on capital and labour deliver jobs and growth.

"There are constructive things we can do in Europe to reduce tax barriers to trade, to use the tax system to stimulate much-needed research and development investment, and to ensure a level playing field for taxpayers in Europe irrespective of their member state of origin. Doing this does not require us to harmonise tax rates or tax bases across the board."

Such harmonisation, Mr Cowen said, reduced the flexibility all countries required in setting their tax systems to address economic issues.

He added that the Government's position should not be misinterpreted as one of opposition to Europe. "Tax harmonisation is neither necessary nor good for Europe. We do not see how it will advance European competitiveness or the Lisbon Agenda, nor, indeed, how it will assist business generally."

The report, funded by the Foundation of Fiscal Studies, was published by the Institute of European Affairs in Dublin.