EU:THE EUROPEAN Commission's top official has said it is still "premature" to say whether it will ever propose a common method of computing corporate taxes across the Union.
Secretary general Catherine Day said yesterday the commission was undertaking an impact assessment on the controversial plan and no final decision had yet been taken.
"We will not say whether we will make a proposal or what type of a proposal until we've done the impact assessment," she said. "It is clear that there are people that would like us to make a proposal and there are people who would not like us to make a proposal. But we are not there yet . . . so it is very premature to speculate on it."
Ms Day, who manages 20,000 commission officials, made the comment just a day after EU tax commissioner Laszlo Kovacs said he would make his proposal for a common consolidated corporate tax base in the autumn. He was also supported by French finance minister Christine Lagarde, who promised to give priority to the plan during France's six-month tenure as EU president from July.
The French support for the tax base plan provoked a storm of controversy in the Republic yesterday with campaigners against the Lisbon Treaty urging people to "vote no" in the referendum to protect Ireland's corporate tax rate of 12.5 per cent.
The core of Mr Kovacs's plan is that the profits of businesses operating in more than one EU state should be calculated according to a single EU-wide formula, rather than the 27 formulas currently used. Profits would then be reallocated to the countries in which the businesses are active, to be taxed at the tax rates of those countries.
Mr Kovacs is also considering consolidation, which could see profits being allocated between countries using measures including size of payroll, value of asset base within a particular country, sales or other measures.
One device under consideration is the introduction of a "sales factor" into the formula, which should be based on "sales by destination". Some experts warn this could hurt the Irish exchequer by diverting a portion of a company's corporate tax payments to the EU state where the consumer buys the product, rather than the state where the firm is based.
Mr Kovacs's tax plan is supported by France and Germany but faces tough opposition from Ireland, which fears it will inevitably lead to the harmonisation of corporate tax rates. Several new member states in central Europe also oppose the plan such as Estonia, which does not tax corporate profits that are reinvested in the country.
Ms Day, who is one of commission president José Manuel Barroso's most trusted lieutenants and well aware of Irish sensitivities, signalled that even if there were a common tax base proposal tabled by the commission, it could in the end come to nothing.
"I don't need to remind you that tax issues are decided by unanimity so if there ever was to be a proposal every member state would have to support it. I think after enlargement there are quite a number of new member states inclined towards the Irish position saying that different tax rates are good thing in terms of the business environment," she said at a Dublin Chamber of Commerce event in Brussels to promote a Yes vote in the upcoming treaty referendum.
Ms Day, who was educated at Mount Anville, Dublin, and studied at UCD, warned that Ireland's EU partners would not be able to understand a No vote given that the country had benefited so much from joining the Union.
"I think one of the many, many reasons that Ireland should vote Yes is that we project ourselves now on the international investment stage as pro-European. We say invest in Ireland, we are at the heart of Europe, we have influence we have contacts.
"How could we sell ourselves as pro-European if we say no? And there are plenty of other places that investment can go," said Ms Day. "It is a moment where Irish people really have to sit down and think where are our interests?"
Ms Day said the changes to the Union that would be brought about by the Lisbon Treaty would make it more efficient and give the EU a stronger voice externally to create opportunities in business and also project European values externally.
She also played down the importance of the new position of president of the European Council, which is created by the treaty and has caught the interest of Taoiseach Bertie Ahern.
"Most people describe the function of the president of the European Council as a chairman and I think if you think of it in those terms, it is much more likely than if you talking about a president of Europe," said Ms Day, who as the top civil servant at the commission is keen to protect the powers of the president of the commission.
Asked about potential conflict between the two presidents, she said the people appointed to the posts had a "responsibility to make it work and not to allow a mess".
"We project ourselves now on the international investment stage as pro- European. We say invest in Ireland, we are at the heart of Europe