IRELAND SEES tax sovereignty as a “core issue” and would resist any attempt to impose a common corporate tax rate in the European Union, Minister of State for European Affairs Dick Roche said yesterday.
With French criticism of Ireland’s comparatively low rate of 12.5 per cent having grown sharper in recent months, Mr Roche told committees of the French national assembly and the senate there was mainstream political consensus in Ireland on the issue and that the general election would not change that.
“I made the point to them, first and foremost, that in the treaties we have protected sovereignty on the tax issue,” Mr Roche said after the closed assembly meeting.
“It’s a matter for each individual member state, and any change to the treaties would require a referendum, and it wouldn’t just be Ireland they’d find difficulties with.”
French president Nicolas Sarkozy said last month that Ireland should not benefit from the EU’s financial aid while maintaining its low tax on company profits. “I deeply respect our Irish friends’ independence and we have done everything to help them. But they cannot continue to say ‘come and help us’ while keeping a tax on company profits that is half [that of other countries],” Mr Sarkozy said.
Ireland’s rate is considerably lower than that of France, which stands at 33 per cent.
In a recent report on Ireland’s financial crisis, French senator Jean-François Humbert noted that corporate tax was “a taboo subject” in Ireland and the object of a strong social consensus. “This sentiment is reinforced by the alarmist declarations of the heads of multinational companies which, like the American-Irish Chamber of Commerce, predict the closure of facilities if tax increases,” wrote Mr Humbert, a member of Mr Sarkozy’s UMP party.
He suggested that the competitive advantage Ireland gained through tax policy was “considered a fundamental element of Irish national identity” at a time of European integration.
“The attitude of the Irish population may appear paradoxical. It condemns – while accepting with resignation – the austerity imposed by the government on all of society but rejects, at the same time, the participation of companies in the banks’ recovery. It criticises European intervention on the basis that it challenges national independence, yet believes that this is guaranteed by the opening of its territory and by globalisation.”
Mr Roche said he stressed to the parliamentarians that the effective rates of tax in Ireland and France were much closer, and that corporate tax was not a “zero sum game”.
“Our benefit doesn’t come at a cost to somebody else in Europe. In terms of tax treatment, I referred them to their own very benign rates that have been very successful in funding innovation,” he said. “If we can attract investment into a part of the union, that’s a good thing for the union.”
Mr Roche predicted the general election would have no effect on Ireland’s stance on corporate tax, saying “there is the widest political consensus in Ireland on this issue of the 12.5 per cent”.