Noonan confident over corporation tax

Minister for Finance Michael Noonan has moved to allay concerns that the changes announced at the European Commission last week will increase pressure on Ireland over its corporate tax regime. He said he is "extremely pleased" with the new line-up of commissioners with responsibility for taxation matters.

Incoming European commission president Jean-Claude Juncker outlined a significant restructuring of the directorate-generals – or departments – of the EU’s executive arm last week when he unveiled his new team of Commissioners.

Rather than a separate portfolio, taxation has been incorporated into the economic and financial affairs division under the leadership of former French finance minister Pierre Moscovici. And former Danish finance minister Margrethe Vestager takes the helm at competition, which is investigating Ireland over its tax deal with Apple.

Friend of Ireland

France has long been a critic of Ireland's corporate tax rates, but Mr Noonan said that Mr Moscovici was "well-disposed" towards Ireland.

“Mr Moscovici [WAS]the French Finance Minister for quite some time and he is well disposed towards Ireland and I have good relationships with him,” Mr Noonan said at the euro group meeting in Milan.

Margrethe Vestager is “a close personal friend of mine,” he added. “The way it has worked out on the personalities, I am extremely pleased.”

While the two former finance ministers will hold two of the Commission’s most senior portfolios, Mr Juncker also appointed seven “vice presidents” to co-ordinate the work of the various commissioners.

The appointment of former Finnish prime minister Jyrki Katainen and former Latvian prime minister Valdis Dombrovskis as vice-presidents means these two centre-right former leaders will have significant leverage over the policy and decisions of the European Commission.

Commission challenges

The next European Commission, which will lead the EU over the next five years, faces significant challenges in terms of economic policy. Having moved back into growth in the spring of 2013, euro zone GDP stalled in the second quarter of this year. Inflation continues to fall and unemployment remains at historically high levels.

Finance ministers meeting in Milan this weekend for their biannual informal meeting tackled the thorny issue of investment versus structural reform as a way of stimulating economic activity.

The ECB’s pledge to buy up securitised loans from European banks in order to unlock lending, and its surprise move to cut interest rates further, prompted some expectations that robust action from the ECB rather than further fiscal reforms from member states was being championed as the euro’s main strategy for dealing with the economy.

But senior EU figures used the forum in Milan to again insist that countries must continue with structural reforms.