Cox issues corporate tax warning

FORMER European Parliament president Pat Cox has warned Brussels that any attempt to force Ireland to increase corporate tax rates – would constitute “a grave error of judgment by the EU” and would go against international law.

Addressing an event in Co Meath Mr Cox – who headed the European Parliament from 2002 to 2004 – responded to recent media reports linking current EU Economic Affairs Commissioner Olli Rehn with speculation that Brussels could force Ireland to lower its corporate tax rate.

Mr Rehn was quoted as saying that Ireland “will not continue as a low-tax country, but it will rather become a normal tax country in the European context”.

However, he said: “I don’t want to take any precise stand on an issue which is for the Irish Government and the Irish parliament to decide, but I would not rule out any option at this stage.” Mr Cox said in reply this week: “At the moment, our economy is down but – subject to appropriate public policy responses – is not out. It would be a graveerror of judgment by the EU, its servants or its member states – however powerful or influential they may be – to seek to force Ireland’s hand on corporate taxation because of the pressure of exceptional and difficult economic events.

“The rule of law, solemn guarantees and high level institutional and political assurances must count for something. If not, the very legitimacy of the EU itself would be called into question.”

Government ministers have already said the 12.5% corporate tax rate will not be changed but the European Commission is drawing up plans that could lead to a more level playing field.

Last week, the American Chamber of Commerce in Ireland called on the Government to ensure the country’s corporate tax rates remained unchanged.

“Nothing which would impact on the continued investment in Ireland by our existing base of multinationals, or would deter new investment in Ireland, can be countenanced. The Taoiseach needs to send a very clear message to the multinational community that there will be no increase in corporation tax rates,” said chamber president Lionel Alexander.

US companies employ more than 100,000 people here and have invested more than €165bn.