MINISTER FOR Agriculture Simon Coveney said any increase in the corporate tax rate would be akin to “economic suicide” for Ireland and said the Government will not be bullied on the issue by France and Germany.

Minister for Enterprise, Jobs and Innovation Richard Bruton described Germany’s demand that Ireland raise its corporate tax rate as understandable but “misguided”.

As Dublin hardened its rhetoric on the tax rate controversy, it emerged that Luxembourg’s prime minister was backing Ireland’s position.

Jean-Claude Juncker, who also chairs the euro group of finance ministers, criticised the link between a lower interest rate on bailout loans and pressure to increase corporate tax.

“Not as chairman of the euro group, but as Luxembourg prime minister, I don’t like this link between the corporate tax issue and the so-called Irish package,” he said on Tuesday in previously unreported remarks.

“I’m not happy with the idea that some governments obviously find some pleasure in torturing Ireland in the meetings and outside. I don’t like this way of dealing with serious problems.”

Mr Coveney, who was in Brussels yesterday for his first meeting with his fellow EU ministers, said the focus on Ireland’s tax regime was overblown.

“We are not going to commit economic suicide by raising a corporate tax rate that has served Ireland well and that will be of significant assistance to us in rebuilding our economy, which will be export-led and which will be reliant on future foreign direct investment in Ireland,” he said.

“Regardless of what powerful European politicians say or do, we’ll be holding the line on that.

“The corporate tax issue and the corporate tax base issue are entirely different and separate issues to the cost of accessing the European stability fund as a lender of last resort.”

Mr Coveney said the Government should make no apologies for its position on corporate tax.

The Minister said he recognised that Ireland was in a weak position because of its economic difficulties but said the Government will insist on the separation of the bailout interest question from corporate tax.

“When I was in the European Parliament this issue came up every year and it was the same old story: the French and Germans didn’t like low corporate tax rates in Ireland,” he said.

“We will not allow a situation where we are bullied into submission on the corporate tax rate issue.”

In Berlin for St Patrick’s Day, Mr Bruton met parliamentarians and state secretary for jobs Dr Ralf Brauksiepe to “learn about the German success story and how it had weathered the economic storm”.

He said the German politicians he met were “very well informed” and “understanding” about Ireland’s position but were motivated by “anxiety” rather than what would improve Ireland’s chances of recovery.

The Minister said he was anxious to let Germany know that Ireland is “open for business” and that, behind the banking crisis headlines, was another story of increased competitiveness, something that increasing Ireland’s corporate tax rate would jeopardise.

“Obviously Ireland is willing to look at any reasonable suggestion that . . . would enhance our ability to cope with the crisis and we are engaged in a debate about the common corporation tax base,” he said.

“Equally we would be failing in respect to our own people and to Europe if we pretended that suggestions that are put up are ones that could be helpful if they are not helpful, if they would hamper exports and make a recovery less likely.”