Economics: 'We will fight them on the beaches, in the fields and in the streets. We will never surrender". When plain evil emerged from the centre of Europe 60 years ago, these were the words used by Winston Churchill to rally opposition to it. These days what emanates from Europe's heartland is either plain good or just plain silly. Along with Finland's winning entry to the Eurovision song contest earlier this year, proposals to harmonise the corporation tax base is a good example of the latter.

The idea's proposers vary in their motives. Commissioner Fritz Bolkenstein - he of Services Directive fame (or infamy depending on your viewpoint) - is genuine in his desire to ease the burden of European companies who engage in cross-border trade and have to navigate up to 25 differing tax rates. Others have very different objectives in mind: an end to what they see as the "harmful" effects of low levels of corporation tax.

Low corporation tax has been anything but harmful to the Irish economy. This month sees the 50th anniversary of Ireland's low corporation tax regime. From its first beginnings, the policy brought multinational industry to our shores to the point where, in the last decade, we became winners in attracting foreign direct investment.

For that we have more than our low corporation tax rate to thank. This week a joint report by PricewaterhouseCoopers (PWC) and the World Bank - Paying Taxes - the Global Picture - reveals Ireland to be the second easiest country in the world in which to pay business taxes.

As PWC's Colm Kelly points out, Ireland's corporation tax regime has put us ahead of Singapore, Hong Kong and Switzerland in the eyes of many footloose global businesses.

"Evidence suggests that simpler tax systems, allied to competitive low business tax rates can promote economic growth and achieve a win-win for governments and industry," says Kelly.

Transparency and high certainty of equal treatment are just some of the features that distinguish Ireland's tax regime from that of Germany or Italy. And that is what some, but not all, of the tax harmonisers would like to put an end to. Not entirely without a point (but never the point they think they have), they argue that low corporation taxes could attract investment away from economies like the Netherlands and Germany where business productivity is higher.

They also point out, again not entirely without a point, to the transfer-pricing activities of multinationals in Ireland.

Transfer pricing is a practice whereby multinationals lower the price of components sold to subsidiaries in a low tax environment for use in the early stage of production. The subsidiary carries the production a stage further and sells the result at a higher price than might be considered reasonable compared to the value added by that stage.

The result is that the multinational has strategically located its profits in a lower tax country.

But however it might happen in Ireland, this was never the original intention of our low tax policy, a policy conceived long before the era of worldwide production chains and globalisation. And that very process of globalisation has changed the rules of competitiveness.

As Dermot O'Brien of the Institute of Taxation in Ireland pointed out last week, for the growing number of footloose multinationals a country's overall tax package is a critical competitiveness factor. And those multinationals employ up to a 100,000 Irish employees.

For corporation tax, most of the differences in the level of corporation tax across different member states arises from different rates, rather than differences in the base.

But as experience with stamp duty revenues makes clear, changes in just one factor of a tax's base - the level of thresholds relative to the average house price - can lead to huge shifts in the effective amount of tax paid.

One factor alone, the treatment of deprecation, shows how harmonising the corporation tax base across the EU could prejudice Ireland.

Amongst its proposals the Common Consolidated Corporate Tax Base Working Group (CCCTBWG) - the less than elegantly named commission body currently working on this issue - proposes that a company's assets be pooled for the purposes of valuing and calculating how much depreciation can be written off on the profit and loss account.

That way the job of tax authorities will be made easier.

Now it is hardly surprising that the CCCTBWG would have the interests of tax authorities in mind. But they nonetheless have found some time to consider the economic impact of proposals like this: For economies like Germany with heavy industry, a homogenous approach to depreciating assets over longer periods may make sense; assets used in many more traditional industries on the continent are easier to define and their useful lifetimes easier to calculate.

For economies like Ireland with more dynamic and high-tech industries - particularly the software industry - assets are likely to be much less homogeneous, harder to define and more short-lived. And there are no prizes for guessing in whose interest any harmonised regime will work if one does finally emerge.

Thankfully this is unlikely. As the commission's own communication makes clear, opposition to any kind of tax harmonisation is strong. But for other reasons, the debate might be worth watching.

On 13th December last the European Parliament voted in favour of the Bersani Report. That report, which egged the commission on in its heroic struggle, was supported by the socialist group of MEPs including Ireland's sole Labour MEP Prionsias de Rossa. It was also backed by Fine Gael MEPs Avril Doyle, Jim Higgins and Maireád McGuinness. Fine Gael's Dublin MEP Gay Mitchell voted against. But at a meeting of the National Forum on Europe two weeks ago, Fine Gael leader Enda Kenny had this to say about the matter of Ireland's tax sovereignty: "I want that to remain a national issue here and I have no doubt about that at all. That is where it should be obviously."

Last Friday Bertie Ahern described plans to harmonise corporation tax in Europe as "as untenable politically as it would be unwise on the practical level".

At an economists' conference last October, Labour leader Pat Rabbitte noted how he was "much closer" to the Taoiseach on matters of personal taxation.When I asked him about his position on tax harmonisation, he responded by referring to the importance of foreign direct investment in the Irish economy: "Anything that would put that at risk or would cause it to wobble, I think that's too risky .

The message to proponents of tax harmonisers in Brussels from all the main political parties is now very, very clear: We will fight you on the commission, in the European Parliament and in the European Council. We will never surrender.