TAX HARMONISATION:SENIOR GOVERNMENT Ministers have dismissed speculation that the Irish corporate tax regime is under threat because of French president Nicolas Sarkozy's comments on tax harmonisation.
Tánaiste Eamon Gilmore and Minister for Education Ruairí Quinn have insisted that there is no threat to the State’s 12.5 per cent corporation tax rate and described Mr Sarkozy’s views on “unfair tax competition” as a restatement of a long-standing French position.
Mr Gilmore said yesterday the Irish tax rate would not be altered.
“The position of the Irish Government is absolutely clear. We are retaining our rate of corporation tax,” he said.
“It’s hugely important for us to provide that certainty for investors and potential investors that they know that the Irish Government is not going to increase corporation tax.”
Mr Gilmore said Mr Sarkozy’s comments on tax reform were identical to comments he had made on a number of previous occasions.
“The president said things that the president and the French government have been saying for some time. There’s nothing new in that,” he said.
Mr Quinn also played down talk of pressure to change the State’s corporation tax.
Speaking in Dublin, he said he believed Mr Sarkozy’s speech had been primarily targeted at a domestic audience in the context of a forthcoming presidential campaign.
“I think you have to take some of the things he said with a grain of salt. This man is starting an election campaign for re-election as president of France next summer and all of his comments must be filtered and seen in that context,” Mr Quinn said.
“This is for domestic consumption. The reality is that French corporation tax in certain circumstances is less than ours.”
Mr Sarkozy had a bitter clash with Taoiseach Enda Kenny on the issue of the Republic’s corporation tax rate at a European Council meeting shortly after the Coalition took office last March.
In a major speech in the French port city of Toulon on Thursday night, Mr Sarkozy said looming changes to the EU treaties would “refound and rethink” Europe.
Mr Quinn said yesterday he welcomed the commitment that European leaders were giving to “reinforcing the strength and discipline” of the single currency.
“A common shared currency among 17 sovereign states requires very tight and rigid budgetary rules,” he said.
“The stability and growth pact was a great idea and had strong rules but unfortunately they weren’t enforced and that’s one of the reasons why there’s a lack of credibility in some markets as to the situation regarding the euro.”
Other senior Government sources welcomed the broad thrust of Mr Sarkozy’s speech, saying it was an important move in the direction of devising a coherent response to saving the euro.
Mr Kenny has strongly opposed the need for EU treaty changes in the battle to save the euro and that is still the Government’s official position in advance of next Friday’s European Council meeting.
However, there is a growing acceptance in Government circles that treaty changes are probably inevitable, given the commitment of Germany and France to the strategy as a key element in restoring euro zone stability.
