The Government will not accept that the European Union should have powers in the future to govern company taxation rates by a qualified majority vote of EU member states, the Tánaiste, Ms Harney said yesterday. Mark Hennessy, Political Correspondent, reports.
The draft European Union Constitution produced by the Convention on the Future of Europe proposes that EU finance ministers could agree unanimously to decide some corporate tax issues by qualified majority voting.
In a forthright speech to the Institute of European Affairs, the Tánaiste said the Government wants to bring the current inter-governmental talks on the new Constitution to "a timely and successful conclusion".
"We have said, however, that in the area of economic policy, tax is a red-line issue for us. We are saying this to our colleagues, old and new, respectfully and firmly. We want to be clear and fair to all concerned.
"Everyone in a negotiation has bottom lines. There would be no need for any negotiation if everyone had the same bottom line, or if no one had any bottom line," she said.
The extra EU tax powers proposed in the Constitution, negotiated by delegates from EU governments, MEPs and national parliaments, is "just a temporary halt along this road" for pro-integrationists, she said.
"But I am convinced it would be a recipe for instability and tension around this issue that would prevent progress on the Union's economic, financial and internal market policies," she said.
The proposal would mean that Ireland would have "one minister, one vote, once only" on company taxation.
"After that one vote, national decision-making would be gone forever," she said.
In a blunt warning, she emphasised that the Government would not recommend to voters that they accept such a fundamental change to the EU's laws. "And I don't see the Irish people approving that," she went on.
The Government's "red line" means that the agreement reached during the Nice Treaty which was "approved explicitly in our referendum should remain in place", she said.
The Tánaiste's refusal to consider tax decision-making by a qualified majority vote even in the long-term is significant, since senior Irish officials appear more favourable towards the idea.
Ireland, along with the United Kingdom and Sweden, are under increasing pressure to concede on taxation, as efforts continue to agree a new treaty before the Italian EU presidency ends in December.
Taxation is a core part of a country's sovereignty, she made clear: "Fiscal choices are decided by elections. Monetary choices are not. How much we tax, what we tax, and who we tax, are not mechanical matters of technical rules and targets.
"They are about democratic political choices. In each of our societies, we argue about them, we contest them, and we resolve them. Tax decisions define our political life.
"This is why my colleagues and I in the Irish Government are firm in our view that policy on direct taxation must remain a matter for national governments," she told the institute.
The Government's stand on taxation played a decisive part in persuading Irish voters to accept the Nice Treaty at the second attempt: "We asked people to vote Yes to reaffirm that position. And the people did so, only one year ago," she said.
The lack of qualified majority voting up to now has not stopped efforts to curb "harmful business tax practices", which have been fully supported by the Republic.
Varying corporate taxation rates throughout the EU are "good for the diversity and dynamism of the European economy, and will benefit the countries joining the Union in May 2004," she added.
