Government: EU plan will not affect corporate tax rate

THE Government’s most senior figures have moved to quell growing fears that the country’s low-corporate tax regime will be threatened by European plans to pre-police national budgets.

Taoiseach Brian Cowen said nothing contained in the 11-page discussion document from the European Commission would impact on Ireland’s tax policy.

“The proposal coming from the commission is not, never has been, and never will be a threat to our corporation tax rate,” he said.

In the Dáil, Tánaiste Mary Coughlan, said the opposition’s criticism of the EU’s plans were “populist”.

She said the Dáil will debate European finance policy for two days next week when, if necessary, legislation will be introduced to provide the loans needed to advance the bailout of the Greek economy.

However, Labour’s finance spokeswoman, Joan Burton, said it was a sovereign issue for the Dáil and could not be privately agreed with Brussels in advance.

Speaking on RTÉ Morning Ireland, Foreign Affairs Minister Micheál Martin said there was no threat to the country’s tax system and the proposals were based on broader macro issues.

He said Fine Gael’s deputy leader, Richard Bruton, was endangering Ireland’s reputation among investors by suggesting the corporation tax rate could be affected.

Mr Bruton said the Government should engage in a reasoned debate rather than an over-the-top response to his comments.

He said he had been similarly criticised when raising concerns about the expensive affects of benchmarking, the property bubble and the banking bailout.

However, Mr Martin said the proposal was already provided for in the Lisbon Treaty – which the main opposition parties campaigned in favour of.

Initial resistance has appeared to be rooted in the scope of the scrutiny that member states would allow.

The European Monetary Union has already found this difficult. In its 2008 report on the first decade of EMU, the commission said in good times and bad, budgets should be scrutinised to ensure they do not cause long-term inflationary or spending complications.

Eurozone finance ministers are to meet on Monday and Tuesday next week where the commission’s proposals are expected to be discussed.