The Minister for Finance, Mr McCreevy, will today come under renewed pressure to review the Government's commitment to extend beyond 2005 Ireland's 10 per cent corporation tax regime.
The informal meeting of EU finance ministers here will be asked by the Internal Market Commissioner, Mr Mario Monti, to back a code of conduct committing states not to use company taxation as a means of competing with each other.
Last night the Minister for Finance, Mr McCreevy, refused to meet journalists or comment on his Department's interpretation of what Mr Monti's code would require of Ireland ahead of today's discussion.
Ireland's Custom House Docks and manufacturing tax incentives are specific targets for Mr Monti, although attempts over the years to agree EU tax harmonisation have failed to win the required unanimity among ministers. But the case is made stronger by the looming single currency and Mr Monti will today receive strong support from a combative German Finance Minister, Mr Theo Waigel.
Buouyed by news that Germany should now have no difficulty meeting the Maastricht 3 per cent deficit target - Eurostat has allowed it to discount hospital debts - Mr Waigel has vowed to do battle here on three fronts: what he regards as unfair tax competition, Germany's heavy contribution to the Union budget, and his determination to prevent French attempts to erode the independence of the European Central Bank.
"It has become clear that unfair tax competition is taking place, with tax oases and tax dumping which does not benefit any one state," Mr Waigel told German Radio yesterday. "This is unacceptable."
There have been reports that the main target of his ire, the Luxembourg Prime Minister, Mr Jean Claude Junker , is willing to do a deal on taxation of bank deposits in his country, if the Irish and Dutch come on board on corporation tax.
Mr Monti's package includes four elements, of which only the first is understood to be of major concern to Ireland:
A code of conduct on corporate taxation. Although not legally binding this would subject states to strong pressure not to undercut prevailing tax rates in other member states.
An agreement to set a minimum withholding tax on interest to stop the flight of capital from Germany and Belgium to Luxembourg.
Agreement on legislation to eliminate double taxation on interest and dividend income.
Simplification of the EU's VAT legislation, eliminating numerous exemptions.
Mr Santer appealed to the Germans on Wednesday not to open up the issue of EU budget contributions, a sentiment surely endorsed by Mr McCreevy whose attempts to ensure that Ireland does not have to go cold turkey over the withdrawal of structural funds would be seriously jeopardised.
The debate on the euro this afternoon will focus on two aspects - the currency's external representation at bodies like the IMF and World Bank, and the fleshing out of the Amsterdam summit's agreement to increased economic co-ordination between the member states.
The Economic Affairs Commissioner, Mr Yves Thibault de Silguy, told journalists there was "no question" of undermining the rights of member states at the IMF. It was necessary, he said, to recognise the arrival of the euro and the European central Bank and to "avoid discordant voices". He insisted that the forum for economic co-ordination would have to be Ecofin itself and not a new body. France has been pressing for the establishment of a more powerful euro council and wants to see co-ordination extend beyond the mere exchange of information to the setting and monitoring of common macroeconomic targets.
Mr de Silguy also said that the meeting would not deal with the key issue of agreeing the method for fixing currencies' point of entry to the euro. But he insisted that the decision would be taken well ahead of January 1999 - "we must not take the markets by surprise".
