Ireland’s European commissioner Máire Geoghegan-Quinn has said Brussels is not “dictating the pace” to the Government as it prepares drastic austerity measures to restore order to the public finances by 2014.
As senior officials in the EU institutions struggle to see how the budget deficit can be repaired without increasing corporation tax, Ms Geoghegan-Quinn insisted that all taxation rates were for the Government to decide.
"Nobody here is living in an ivory tower and everybody recognises the amount of pain that people are going to have to take," she told Irish reporters.
"I mean there's a huge recognition and understanding of that and nobody even knows at this point what the final extent of that is going to be until the proposals are produced in November."
The commissioner said "people are concerned about the euro zone situation" when asked about the extent of concern about the economic trends in Ireland at high levels in the Commission.
However, she said commission president Jose Manuel Barroso, economics commissioner Olli Rehn and competition commissioner Joaquin Almunia acknowledged the scope of the Government's efforts to find a way through its financial difficulties.
"There is this view abroad, I don't know where it's coming from, that the Commission is dictating to Ireland as to what it should do. Nothing could be further from the truth," she said. "There is a very, very open transparent cooperation and working relationship on both sides which is absolutely essential. It's essential from the euro zone point of view, it's working very well."
Corporation tax policy came into focus last week when Mr Rehn said no tax measures should be ruled out as the Government tries to balance the books.
The Government insists it will not change the policy. However, Commission secretary general Catherine Day said the policy of not increasing the 12.5 per cent rate may lead to further "unpalatable" spending cuts.
"It's very important to re-emphasise that any decision in relation to taxation is a sovereign decision of the member state and Ireland will decide what policy it's going to pursue in relation to taxation," Ms
Geoghegan-Quinn said.
She said Mr Rehn did not specifically say that Ireland has to look at corporation tax rate but was referring to the debate around raising money and tax and cutting funding that governments must have when they are in financial difficulty.
"Ireland is going through that process now and it's an extremely painful process. But I can't emphasise enough to you or overemphasise to you that the European Commission is not dictating the pace.
"The European Commission is working with in close cooperation with the Irish Government, very appreciative and conscious of the major efforts that are being made by the Government - and in particular Brian Lenihan - and very appreciative. And it is a sovereign decision by the member state as to how they want to raise the taxes."
There was "full confidence" in Ireland and its capacity to act with determination to complete the financial repair and the necessary restructuring of the banking and the financial sector, she said.
"There is an openness and a transparency and a very close cooperation between the Commission and the Irish Government and I think there is an appreciation from both sides that there is that transparency and close cooperation is there.
"Above all I think it's incumbent on us to acknowledge that there is a very, very serious attempt in very difficult circumstances by the Irish Government and by Brian Lenihan."
