No threat to corporation tax from EU, says Cowen


TAOISEACH BRIAN Cowen has rejected Fine Gael’s claim that the EU Commission proposal for more co-ordination of national budgets threatens Ireland’s low corporation tax rate.

“The proposal coming from the commission is not, never has been, and never will be a threat to our corporation tax rate,” Mr Cowen told journalists yesterday.

He said what was involved in the proposal was a peer review process within the euro area to make sure countries did not find themselves in the position some had done recently when weaknesses were identified and the currency came under attack.

Mr Cowen said the only change being proposed was that there would be greater consultation in future to protect the economies in the euro zone.

He said it was unfortunate the Opposition had sought to create the impression that Ireland’s corporation tax was up for review and he reassured business leaders there was no question of that happening.

Fine Gael deputy leader and finance spokesman Richard Bruton had earlier repeated his claim that the commission proposals would involve a final veto over Irish budgets and could lead to tax harmonisation, which could jeopardise Ireland’s corporation tax rate.

Speaking on RTÉ Radio’s Morning Ireland programme yesterday, he warned other EU states could possibly pursue their own agendas at the expense of Ireland and that budgetary decisions might be taken without a proper Dáil debate taking place. “There is a danger for Ireland’s ability to develop a proper economic strategy – including its tax policy – in a process where Ireland’s budget is going to be pre-cleared in Europe, where there will not be a veto by the Irish Government on that pre-clearance, and where there will be penalties attached to that,” he said.

“I think it’s very important that we defend the need for an entire new budgetary approach for Ireland that commits to a transformation agenda that we haven’t seen from this Government or from Europe,” said Mr Bruton.

On the same programme, Minister for Foreign Affairs Micheál Martin claimed Mr Bruton’s comments on corporate tax undermined attempts by the IDA to bring investment to the country.

“The corporate tax rate is a very significant instrument to attract investment into the country and multinationals reading the newspaper headlines and looking in on this will have second thoughts about investing,” he said.

Mr Martin said the new proposal was just the beginning of a discussion at European level over better co-ordination of economic policy among member states. “It doesn’t mention tax harmonisation and the corporation tax rate is in no way in any danger and we have received categorical reassurances on that as you know from protocols we negotiated in the context of the Lisbon Treaty,” he said.

“I know that as a former minister for enterprise, that anyone who raises unfounded doubts about the level of our corporation tax or the sustainability of it puts existing jobs and our economy at risk,” Mr Martin added.

EU finance ministers will discuss the commission’s proposals at their regular meeting next Monday.