Bruton tells US corporate tax rate will remain untouched
Published 15/03/2011 | 05:00
Former Taoiseach John Bruton said there would be "no change whatsoever" in our corporate tax rate. The battle on Ireland's tax rate was now "won" and "over".
He said Ireland's low corporate tax rate was older than French President Nicolas Sarkozy himself, and was an issue that Ireland had pursued to attract Foreign Direct Investment since 1956 -- long before we joined the European Union.
"I am absolutely sure we will get through this with not only our corporation tax rate untouched but also our system of corporation tax unchanged," he said.
Mr Bruton, who is also a former EU ambassador to Washington, was speaking to over 300 international business leaders at the Ireland Day at the New York Stock Exchange yesterday.
The talks come only days after a dispute over corporate tax led eurozone leaders to refuse an interest rate cut on Irish bailout loans.
Mr Bruton described the pressure coming from Mr Sarkozy and German Chancellor Angela Merkel to change the rate as a "piece of theatre", adding that they were trying to justify to their constituents the lending of money to Ireland.
"They must remember our corporation tax regime is one of the ways of repaying these loans, so it would be quite perverse to suggest that we should abandon that policy as that would further frustrate our capacity to repay the loans," Mr Bruton said.
"If people are lending money, they want it repaid and the way we will get the money to repay it is to keep our tax rate. It will be maintained. It is a matter of honour."
Mr Bruton said Ireland would continue to seek a cut in the interest rate on our bailout loans. "We are simply looking for a reduction in the interest rate on money loaned to us. This could be brought down so that those lending it to us weren't making exorbitant profits on the transaction," he said.
If we were forced to make any changes on the rate, it would have to be decided unilaterally by all member states.
"We have a veto and we will use it," he said bluntly.
Mr Bruton again criticised the ECB for not using its powers to prevent credit bubbles developing in Ireland.
Also addressing the Ireland Day conference hosted by the Irish American Business Association, IDA chief Barry O'Leary said Ireland would be "crazy" to change its corporate tax rate.
"Multinationals spend about €19bn in the Irish economy, have a payroll of €7bn and they account for nearly two-thirds of our corporation tax. It just doesn't wash when Mr Sarkozy claims that the more you hike up corporation tax, the more you'll get. We would be crazy to change it."
His comments were echoed by Gary McGann, group chief executive of Smurfit Kappa, who described the latest row as an "opportunistic attack on the tax base".
Meanwhile, managing partner with KPMG Terence O'Rourke said the fact that a row over the tax rate was in the headlines was starting to hurt Ireland.
"I know three companies who are thinking of expanding and are wondering should they stay in Ireland or move away now," he said, adding that concerns over the corporate tax rate on top of an ever increasing personal tax rate were pushing businesses out of Ireland.
"If you are bringing the best and brightest to Ireland to work, they are paying over 55pc in personal tax versus 20pc in Switzerland. If we mess with corporate tax rate on top of this, we are dead. It's that serious," Mr O'Rourke said.