THE GOVERNMENT insisted last night that it would not capitulate to pressure to increase the corporate tax rate and that a reduction in the interest rate on bailout loans remains its objective.
As France and Germany called again for some form of a “gesture” from Ireland to secure lower loan costs, a succession of Irish Ministers repeated the line in Brussels that the Government was not for turning in the run-up to a big EU summit at the end of the week.
In advance of that meeting, EU finance ministers agreed last night to back a permanent new bailout fund to the tune of €700 billion and provide it with powers to introduce debt restructuring from 2013.
However, European Central Bank chief Jean-Claude Trichet expressed concern that the new fund will not be allowed to buy up existing debt from struggling euro zone countries.
Dublin’s insistence that no reversal is in prospect on corporate tax has heightened pressure on Taoiseach Enda Kenny to offer some other concession when he meets his European counterparts on Thursday and Friday.
“If colleagues come up with alternative proposals in terms of some kind of quid pro quo away from the area of corporate tax we’re quite willing to listen,” Minister for Finance Michael Noonan said as he arrived in Brussels for EU talks.
While Mr Kenny has dismissed a proposed common consolidated corporate tax base (CCCTB) as tax harmonisation by the back door, Minister of State for Europe Lucinda Creighton said the Government was committed to “constructively” examining European Commission legislation to establish a CCCTB.
She denied any change in the Government’s position on that front. “There are discussions on a bilateral basis between Ireland and our European partners on ways on which we can move forward but the issue of corporate tax is just simply not on the table,” Ms Creighton said.
“The general position on the interest rate is there is scope and there is a willingness around the European Council to facilitate Ireland and to acknowledge the difficulty with the sustainability with the debt. There is no ultimatum as such on the table.
“They’ve asked for a gesture and we’re talking to them about what can be potentially arrived at on Friday or potentially at a later date.
“There’s no guarantee that a specific outcome for Ireland, as distinct from the overall EU package, will happen on Friday. It may take longer.”
As Dublin strives to take corporate tax off the agenda in advance of the summit, it remains unclear whether France or Germany would accept a statutory limit on public debt as an adequate quid pro quo for a lower interest charge.
With the Government also campaigning for new measures to ease the cost of the bank bailout, Minister for Energy Pat Rabbitte said the question of burden-sharing with bank bondholders remained on the agenda.
“I don’t think the Government has any option but to push it very strenuously,” he told reporters.
“It must be very unique in this kind of programme that it is deemed so early to have failed,” said Mr Rabbitte.
“It’s very difficult to see without revisions how it can be implemented,” he added.
Mr Rabbitte said that it appeared that the EU Commission and the European Central Bank (ECB) were revising their assessment of the Irish rescue plan.
However, German finance minister Wolfgang Schauble said that Ireland must make “proposals” if it wants a reduction on the interest rates.
“When someone wants to change a contract which he has just agreed to, then he has to think not only about what the other party to the contract should change, but he must also come up with suggestions about what he can change himself,” he told reporters.
France’s finance minister, Christine Lagarde, took a similar line.
“Today we decided nothing on Ireland because we had no indication from our Irish colleague of any kind of modification,” she said.