It was nice to read on a bank holiday Monday that your job is trash. Such jobs have been "dumped" into cheap and cheating Ireland. At least, that is the implication of remarks by the new German chancellor, Gerhard Schroder.

The accusation of dumping is generally made of foreign companies who are alleged to sell their product in a market below cost to buy market share quickly. Industries often make this potent charge as an excuse to introduce protectionist measures. "Social dumping" is where governments are accused of competing to attract mobile foreign investment and jobs, by engaging in an auction of grants, tax breaks and whatever other inducements can be found. It is beggar-thy-neighbour industrial policy.

The Republic is now effectively accused of this, by virtue of the planned low corporation tax rate of 12.5 per cent.

The Financial Times reported that Mr Schroder said that social dumping would become an "alien concept" following the euro's introduction. He said the new German government's plans for more intensive co-ordination of financial, economic and tax policy in the EU would focus on company taxation. "We in Europe literally cannot afford to have such fragmented corporate tax with such differences," he said.

The implication is that jobs which come to the Republic because of our low tax rates, among other things, have been won by cheating on our EU neighbours which have higher tax rates.

Mr Schroder's concern for "Europe" not being able to afford different corporate tax rates is nothing more than a smokescreen for Germany not being able to compete with its effective corporation tax rate of 47 per cent and still needing to sustain domestic tax.

For the first time, this State is being looked to as some sort of model of a small, open economy which has done some things right. EU structural funds are one factor in that success. Agriculture has benefited from the CAP over the years. But low corporation taxes are undoubtedly a major factor, too.

With structural funds and agricultural supports about to fall, how could we even contemplate undoing one of the factors in our recent success by raising corporation tax? Besides, we are still not as wealthy as Germany. Our overall GDP per capita may have passed above 75 per cent of the EU average, but it is still belowaverage, and Germany's is above-average. We are only beginning to secure our future prosperity.

What are high German taxes paying for? Glibly, you could say, EU transfers to the Republic. More significantly, Germany has an unemployment problem now worse than our's, and a much more generous welfare system.

In particular, it faces a pensions crisis which we don't have. Italy also has a pensions crisis and a problem with public finances in general, at least in the eyes of German policymakers. These are problems of their own making. Is Germany about to press the EU to take community-wide responsibility for the public debt of each member-state? Not on your life. Solidarity extends only as far as each member-state can bear it, Germany included.

Mr Schroder can demand solidarity from the likes of us not to compete against Germany for internationally-mobile investment. Simply put, we cannot afford such solidarity, just as Germany cannot afford to take any responsibility for Italian public debt.

It was never part of the EU deal that we should all agree not to make our tax regimes any more competitive than the least competitive member-state. It should not be in any EU deal now, whatever the smokescreens about employment pacts and so forth.

It was thought that the main challenge of the euro for the Republic was that interest rates would be set by the European Central Bank to suit the major economies of the EU, not the Republic. Now we have from Mr Schroder the idea that corporate tax policy should follow the same course. The new challenges for this State multiply. We must refute all accusations of social dumping, for our sake and the sake of the whole EU.

Oliver O'Connor is an investment funds specialist.