IRELAND SHOULD support the European Commission’s proposals for the new form of energy tax and the financial transactions tax, according to a tax law specialist.
Senior counsel Anthony Collins told a conference on tax harmonisation in the EU at the weekend that Ireland should seek to play an active role in the debate raised by proposals for possible fiscal union.
If such union does occur, it will be a gradual process, he said. Even where partial harmonisation has already occurred, member states retain flexibility in rates and exemptions, he said. “Provided it is prepared to consider and propose solutions to real issues and to pay a full part in discussion and negotiation, Ireland has the capacity to influence the construction of a fiscal union in a manner that will not damage and may even further its interests,” he said.
“Ireland should, therefore, attempt to develop, with the assistance of bodies such as the ESRI and with the involvement of the joint Oireachtas committees . . . a coherent position on the characteristics of the type of fiscal union it would like . . . and how that could be brought about. Fiscal union should hold no terrors for Ireland.”
Irish TimesEconomics Editor Dan O'Brien told the conference the worst thing that could happen for Ireland was for the euro zone to fall apart. More centralised fiscal control was not necessarily a bad thing, he said, if it prevented governments from doing bad things. "No one is suggesting governments will be told you can only spend so much or tax so much. The issue is the deficit," he said. "You can tax and spend as much as you like if it balances."
It was not the case there was a close correlation between tax and performance. He pointed out Greece with less than 8 per cent of gross domestic product, had very low taxes, while the country with the highest tax in Europe, Sweden, with 16 per cent of GDP, greatly outperformed it. “Taxes don’t seem to have a detrimental effect on economic growth,” he said.