Bruton baulks at proposals to change corporate tax rate

FORMER Fine Gael leader John Bruton has lashed out at attempts to introduce a level playing field on corporate tax within the EU.

Ireland has one of the most competitive corporate tax rates at 12.5% introduced with the support of the EU.

It has become the basic rate for all firms based in Ireland and got over the issue of this country having a competitive advantage by operating a dual corporate tax system to attract overseas investment.

Prior to that Ireland operated a two-tier system with multinationals charged just 10% tax on the profits earned here.

By getting rid of the two tier system Ireland got round the allegation it was giving favoured status to foreign companies and the EU were satisfied.

But now former French President Valery Giscard d’Estaing is threatening to undermine the Irish system.

As part of the new treaty he is working on for the EU one of the proposals is to scrap the national veto on tax to eliminate “unfair” advantage for inward investment.

Both Germany and France are backing the controversial voting proposal which, if introduced, would wreck our foreign direct investment policy that has relied heavily on offering generous tax breaks to overseas investors.

Mr Bruton, who is part of Mr d’Estaing’s team, failed to get him to abandon that part of the plan.

Mr d’Estaing wants to introduce majority voting on tax matters that impact directly on the single market.

While the proposal covers fraud and tax evasion the main concern for Ireland is tax breaks, that have been so vital to our status as a haven for foreign investment, would be eliminated at the first opportunity once the new treaty has been adopted.

“It’s crazy to be putting forward proposals to introduce qualified majority voting on tax matters on the grounds of promoting fair competition,” said Mr Bruton.

He believes any problem with unfair competition would be best dealt with at EC level which it could do by broadening its remit as a competition watchdog within the EU.

Driving the push for change is a concern the new entrants to the EU will also rush to introduce low tax regimes for overseas investors and depriving existing states, with high corporate tax regimes, of badly-needed outside investment.

Defending his call for majority voting proposals to be outlawed Mr Bruton said “voting is a politicised process” and to suggest it would bring fairness to the market was not facing up to a basic EU reality, he said.