ANN CAHILL: Bailout ‘should cost Ireland double corporation tax’

GERMAN MEPs stepped up the pressure on Ireland over its corporation tax rate insisting that it would have to double if the country needed a bailout.

Members from both the largest group in the parliament, the European People’s Party, and from the smaller Green group pushed the issue with the president of the European Central Bank, Jean-Claude Trichet.

But while he ignored their statements, concentrating on Ireland’s attempts to regain competitiveness and deal with the banking crisis, the MEPs issued a declaration afterwards.

Werner Langen, a member of the ruling bureau of the EPP, to which Fine Gael belongs, told MEPs, that Ireland was guilty of “massive competitive distortion on corporation tax”.

Another EPP bureau member, Markus Ferber, and Sven Giegold of the Green group said, if the country’s budget situation deteriorated more and support from the EU became necessary, “it is for the Irish Government to make concessions in tax policy in return”.

If Ireland needed to borrow from the EU-IMF €750 billion fund, then the corporate tax rate has to be doubled – and Ireland must stop opposing European co-operation in tax policy, insisted the MEPs.

They are anxious Ireland withdraws its opposition to proposals for a common corporate tax base – this would see multi-nationals able to calculate their tax in all EU countries where they have a base along the same lines. Countries would receive payments based on where the product was made and where it was sold, something that would benefit the more populous states.

Germany has long resented Ireland’s low corporation tax rate of 12.5% and especially that German companies headquartered in Ireland can use a series of loans to reduce their payments to Berlin.

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