Kenny refuses to increase corporation tax rate

TAOISEACH Enda Kenny has refused to increase the country’s corporation tax in exchange for a 1% cut in the interest rate on Ireland’s €67bn EU-IMF loan.

At his first summit with EU leaders, Mr Kenny held up negotiations as he and French President Nicolas Sarkozy argued forcefully and loudly with each other.

EU leaders abandoned the attempt to reach agreement, putting it off for further negotiations over the next two weeks.

Greece, on the other hand, agreed to the sale of state assets and secured a 1% cut in their rate.

Mr Kenny had demanded a reduction in the interest rate the country is paying for the bailout, and a doubling of the repayment time to 14 years.

But German Chancellor Angela Merkel and French President Nicolas Sarkozy said he would have to raise Ireland’s corporation tax rate.

Mr Sarkozy told Mr Kenny that he could not expect France to risk losing millions lending to Ireland without getting something in return. They are also demanding some state assets such as the ESB be sold.

The meeting continuing past midnight as Mr Kenny’s demands held up negotiations on the so called Pact for the Euro, a plan first put forward by France and Germany but objected to by many countries.

It was a baptism of fire for Mr Kenny at his first EU summit as he assured his fellow leaders that the country will repay the loans and pointed out the economic challenges Ireland faces.

Angela Merkel made it clear that if she were to agree to a cut in the 5.8% interest on Ireland’s loan, she also wants the country to accept a cross-border common method of companies assessing their tax.

Picture: Taoiseach Enda Kenny speaks with Lithuania's President Dalia Grybauskaite during the EU Summit in Brussels yesterday