FRENCH POSITION:SENIOR FRENCH government officials were holding a tough line on Irish corporate tax last night, indicating that no concessions would be made on the interest rate on Ireland's bailout loans unless Dublin made a gesture in return.
A senior Élysée Palace official said it believed Ireland’s new government was “assessing the situation”, but added that no detailed discussions were expected again until the results of stress tests on Irish banks became known.
“It’s for the Irish to tell us. We’re not putting them under pressure – it’s for them to weigh up the issues and to come and see us,” the official said.
“A new government is in place. It was not ready on March 11th, and it’s probable it won’t be ready during this council meeting, to enter into dialogue leading towards a conclusion.”
Asked about the assertion by Minister for Finance Michael Noonan that France’s effective corporate tax rate had been shown by a recent international report to be 8.2 per cent, significantly lower than the headline rate of 33.3 per cent, the official said: “It’s totally false.”
Mr Noonan had cited the findings of a World Bank/PriceWaterhouseCoopers report which also showed that Ireland’s effective rate was over 11 per cent, compared to a nominal rate of 12.5 per cent.
On whether Paris was expecting some sort of concession from Dublin, a second Élysée official said only the Irish government could answer the question. “It seems to me that, with the new government having taken office, it’s assessing the situation,” he said.
“One element to take into account is the stress tests, the results of which will be known after the council meeting. So it seems more likely to me that there won’t be a detailed discussion on Ireland during this council meeting, and that Ireland will be examined again by the heads of state and finance ministers when all the necessary information is available.”
The Élysée accepts that EU leaders are unlikely to formally adopt a new plan to strengthen the euro zone bailout fund this week, but said the delay was simply due to the need for ratification of the plan by national parliaments.
The expectation was that a stronger European Financial Stability Facility (EFSF) would be set out this week. EU leaders have agreed it in principle, but they have not agreed on how they will strengthen it, raising its effective capacity from €250 billion to the full size of €440 billion.
“On March 11th we all said we were ready to take the necessary measures to raise the capacity of the EFSF to €440 billion. That requires approval by parliaments,” an official said.
“We need time for that approval to be granted . . . It’s difficult to say how long it will take, but the important point is that there is a political will from all sides to bring the EFSF to €440 billion.”