Lenihan: Firms don’t face higher profits tax

FINANCE Minister Brian Lenihan has sought to reassure companies that they won’t face higher taxes on their profits despite the state needing to raise more revenue.

Mr Lenihan yesterday ruled out any increase to Ireland’s corporation tax rate but confirmed other tax hikes were in store in the budget.

His department said the minister had “acknowledged that taxation will form part of the solution” in trying to reduce the deficit. But the department insisted that an increase to corporation tax – which is levied on company profits – would not be among the hikes.

The department was attempting to end a flurry of speculation on the corporation tax issue following comments made by the EU’s economic and monetary affairs commissioner, Ollie Rehn, in Brussels.

Mr Rehn told reporters that Ireland could no longer continue as a low-tax country but would become a “normal-tax country”.

Asked if he believed Ireland’s corporation tax rate should increase as part of that change, he said he did not wish to take a stand on an issue which was for the country itself to decide but said he would “not rule out any option at this stage”.

Taoiseach Brian Cowen also failed to rule out any option when quizzed about Mr Rehn’s comments.

Asked three times if corporation tax would be examined, Mr Cowen said the Government needed “time and space” to examine all issues as it prepared a four- year budgetary strategy to be published in November.

The strategy will outline how our deficit will be cut to 3% of GDP by 2014 to comply with EU rules.

“I don’t wish to... get into any sort of speculation – it’s not very helpful,” Mr Cowen told Today FM.

“We’ve a very intensive and detailed appraisal to do between now and November when we will publish this four-year programme, and I think the Government need to be given the time and space to sit down and work through these issues.”

When it was put to him that he had previously ruled out any changes to corporation tax, Mr Cowen said: “These are matters for national governments to determine for themselves. But it’s really important not to be drawing any speculative conclusions whatever.”

But Mr Lenihan’s department had no hesitation in stating there would be no change to the low corporation tax rate, which is seen as a key way of both keeping multinationals in Ireland and attracting new business.

“The Government has always made it clear that the corporation tax rate will remain at 12.5%,” the department said. “The 12.5% corporation rate is a cornerstone of the Irish industrial policy.”

Mr Cowen downplayed claims that Ireland would ultimately need to resort to an EU or IMF bailout: “I think it’s important to point out that the Irish Government, the Irish people, are determined to deal with these issues ourselves.

“The commission, Commissioner Rehn, even as close as two days ago was confirming that there’s every confidence amongst the European Union institutions and amongst our member state colleagues that we will of course seek to come forward with proposals that meet our commitments under Stability and Growth Pact rules as they apply.”

Mr Cowen met yesterday with former US President Bill Clinton, who said it was important to give people a message of hope.

On Newstalk, Mr Clinton said: “People don’t need a lecture about how things are bad. They need to be told that if you’re going to do something tough today it’s because it’s the only way to get to a better tomorrow.”


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