Ireland will not be forced into a position where it loses competitive advantage due to harmonisation of corporation taxes throughout EU member states, the Taoiseach warned today.
Fianna Fáil said it would veto any EU plans to change Ireland's low corporation tax if re-elected and vowed to maintain the 12.5 per cent tax rate in order to protect jobs.
Taoiseach Bertie Ahern
Mr Ahern was speaking about plans by the European Commissioner for Taxation and Customs Union László Kovács to introduce a common corporate tax base throughout the EU.
Speaking to reporters in Dublin, Mr Ahern said the issue was "hugely worrying" and would be a "disaster" for this State's competitiveness.
Mr Ahern said he could not think of a bigger issue than corporation tax for the next government because it directly related to the strength and power of the Irish economy. He understood there were some who were "envious" of Ireland's position with a low corporation tax rate.
"This has generated huge employment here; it has brought a huge amount of investment to this country. But tax harmonisation of corporation tax is bad for this country, it's bad for employment in this country, it's bad for business in this country," he said.
"I can't think of a single thing that's good about that policy and I've resisted it for all my political life, when I've been involved in European Councils, which is now back for 20 full years, and I think people in this country should be seized on this issue.
"This would be a disaster for this country and there are cute people out there trying to work their way around it and trying to cajole others into it and this country has to stand up and fight it."
Mr Ahern said certain people in Europe were trying to "sneak this debate forward" by claiming it had nothing to do with tax harmonisation and he said some politicians were "sleepwalking into the trap".
"Clearly, it is a threat again to try to harmonise European taxes. That is hugely worrying for this country because, it's not the only thing we've done successfully, but the low corporation tax rate and the R&D credits have allowed us to develop the economy to the capacity we have," Mr Ahern said.
Mr Ahern said the attempted changes were being done "in a cute way" after a number of failures to get harmonisation which had been "seen off" by Ireland.
"They are now going back to try and harmonise the whole regulations, the whole regulatory system behind it and saying 'this has nothing to do with tax harmonisation'....They are sneaking this debate forward quite cutely. [Minister for Finance] Brian Cowen and I have laid out very clearly where we stand on it," the Taoiseach said.
Speaking earlier at a Fianna Fáil media briefing in Dublin, Minister for Finance Brian Cowen said he would defend his "national sovereignty" on the issue.
The EU-wide tax proposals would also be the subject of a conference being organised by the German presidency this month, he said, and the issue would again centre the agenda of a meeting of EU finance ministers in June.
EU Commissioner for Taxation, last week
Mr Cowen said Fianna Fáil was "committed" to maintaining the currently low rate of corporation tax at 12.5 per cent and claimed it was the party's work, implementing the reduction of the tax rate from 36 per cent, that was responsible for 500,000 new jobs in the Irish economy.
He said a low corporation tax would ensure the protection of jobs, adding: "We understand how important it is to this country's success."
The Labour Party announced it too backed the maintenance of the 12.5 per cent tax. However, Mr Cowen warned voters for a Fine Gael/Labour coalition to "make sure they do what they claim they're going to do".
He said former Labour leader Ruairí Quinn had opposed a reduction to 12.5 per cent as he led his party into the 2002 general election.
The Minister said his priorities, if re-elected, would be to implement the National Development Plan (NDP), create a balanced budget, guarantee public services through increased spending and reduce taxation.
EU Commissioner László Kovács published a progress report last week on the plan for the so-called Common Consolidated Corporate Tax Base (CCCTB) and said he knew the project was an ambitious one and that it had "raised some scepticism" from certain member states and "questions that are to be answered".
"I expect all the stakeholders in favour of the project to advocate the CCCTB as the solution to eliminate existing fiscal obstacles throughout the European Union, help companies to improve their competitiveness and make Europe a more attractive place to do business," the commissioner said.
Mr Kovács claims the new tax system is a "comprehensive solution to tackle in one go all the company tax obstacles arising when companies carry out cross-border activities".