Tánaiste insists 12.5% tax rate will not change

IRELAND IS not in the business of changing its corporation tax rate, the Tánaiste has insisted, rejecting renewed EU threats to the 12.5 per cent rate.

Eamon Gilmore also said a financial transaction tax that applied in Ireland but not in Britain was unacceptable because it would put Ireland at a competitive disadvantage. He said the EU had to be careful about implementing a proposal that would put Europe’s financial services industry at a disadvantage to states outside the EU.

As he was questioned in the Dáil about the proposals by Germany and France to push for an EU- wide business tax system, the Minister for Foreign Affairs said Ireland’s position on corporation tax was “soundly based” and “we are determined to defend that position”. The State’s position would not be dictated by the “electoral cycle” in any other member state.

He told Independent TD Shane Ross that the argument about the tax rate had been won. Mr Ross had called on the Government to stop “dancing to the Merkel-Sarkozy duet”.

Mr Gilmore said 12.5 per cent “is our rate of corporation tax and we are not in the business of changing it”.

Mr Ross had described as “alarming” plans by the EU’s two largest economies – in a paper submitted to European Council president Herman Van Rompuy – which called for “tax co-ordination” as a necessity to secure economic growth. This is seen as a new threat to Ireland’s corporation tax.

He said everyone knew the pressure on the corporate tax base and the financial transaction tax “is an electoral gimmick by two very powerful nations”.

“How long are we going to put up with this extremely unhelpful and hostile attitude from Merkel and Sarkozy?” Since the Government came into power, “we have been suffering at the electoral designs of Sarkozy and Merkel”.

“Isn’t it time that we said to them that we’ve had enough of this, that we are not going to be victims of the Franco-German political domestic agenda for any longer?” Ireland should be saying it is an independent country and “our interests are putting Ireland first and not dancing to the Merkel-Sarkozy duet”.

French president Nicolas Sarkozy is seeking re-election this year and Germany faces federal elections in 2013. Mr Gilmore insisted “our position is not going to be dictated by the electoral cycle in any other member state”.

People should look at the Government’s record. “When the issue of the corporation tax rate was put very forcibly on the agenda by other member states, we very vigorously and effectively rebutted and refuted that argument,” he said.

The Government had made its position clear “and I believe we won that argument”.

Mr Ross also asked if the proposed financial transaction tax was a “deal breaker” because of the threat it posed to the financial services sector. He said the sector employed 30,000 people and accounted for about 20 per cent of corporation tax income, “an absolutely vital part of the economy”.

The Tánaiste told him that the Government was conscious of not reaching any agreement that would put Ireland at a competitive disadvantage.