The report that Ireland has one of the best records on state aids in the EU will be welcomed by policy-makers and industry. It undermines the accusation often hurled at Ireland that industry in this State enjoys an unfair advantage over that of our EU partners. And it will strengthen the belief that the EU will look favourably at some special tax regimes for Dublin's dock-lands and other areas . The report could scarcely be more authoritative as it is being compiled by a special EU committee which has been examining tax breaks across the Union at the request of finance ministers. Its interim report gives Ireland a very good bill of health but it is less polite about the situation in other EU states. The Netherlands and Belgium are named among the worst offenders with France a close third. The sheer volume of unreported state aids is said to have taken the Commission by surprise.
According to a report by the Economics Correspondent of this newspaper yesterday, most of Ireland's main tax incentives are likely to be approved in a Commission survey of some 200 state aids across the EU. They include those at Dublin's International Financial Services Centre (IFSC). This is welcome news for the Government at a time when other EU states have been complaining about Ireland's tax regime and some EU states pressing for the total abolition of state aids. The Government is strongly of the view that state aids are an integral part of industrial policy and help to promote specialist industries. The interim report for finance ministers is designed to identify and eliminate "harmful" tax competition. As part of the process, member-states have been lodging complaints about tax regimes in other countries.
Only last month, finance ministers were warned that the whole exercise could become bogged down because of the avalanche of complaints by member-states against each other. At the time, the EU Competition Commissioner, Mr Mario Monti, appealed to member-states not to add further complaints to their burden. The committee examining the tax regimes across the EU is now expected to table its final report in December; its mandate is to report on the compatibility of all the various measures with the principles underpinning EU competition law. Ireland has not always been viewed positively in regard to tax breaks.
Last January, it was revealed that this State had failed to notify the Commission of continuing special capital and rent/rate allowances to companies in the IFSC since 1993. The Government has argued that this was an administrative error rather than any deliberate attempt to circumvent the regulations. The interim report on state aids would tend to corroborate that view. In all other cases this State did at least notify the Commission of the special state aids which are in place - unlike some of our EU partners.