Noonan tells investors in US our corporate tax rate is not 'up for renegotiation'
Published 15/06/2011 | 05:00
Finance Minister Michael Noonan has assured prospective US investors that Ireland's low rate of corporate tax "is not up for renegotiation" ahead of key meetings with the IMF acting chief John Lipsky and the US treasury secretary Timothy Geithner in Washington.
Speaking to investors invited by IDA Ireland to a breakfast meeting at the New York Stock Exchange yesterday, Mr Noonan stressed that Ireland had the support of the European Commission and the IMF on its tough stance on retaining the 12.5pc corporate tax rate. "They see the logic to it and are not pushing for any changes to it," he said yesterday.
The minister will raise Ireland's continuing efforts to secure a cut in the interest rate on the EU/IMF €85bn bailout package with Mr Geithner in the face of demands from France and Germany that it gives up the low corporate tax rate in return for a rate reduction.
EU finance ministers will meet in Luxembourg next week and must unanimously sanction a rate cut for Ireland, but France and Germany are holding firm on their tough stance on the corporate tax rate.
While the IMF is supportive of Ireland's insistence that it must retain its corporate tax rate, Mr Geithner is reported to have vetoed plans that would have allowed Ireland to apply a significant discount on €30bn of unguaranteed bonds in the run-up to the bailout deal.
His four days of meetings in the US came as EU finance ministers held an emergency meeting in response to concerns that Greece was going to default on its debt payments.
Mr Noonan said he didn't think Greece would default but indicated he saw "some arrangement" for that country's debt because they could not afford to meet the repayment dates.
There is mounting political opposition in Washington to the US participating in any second bailout for Greece. Two Republican senators have begun to push President Barack Obama not to include American dollars in any new rescue.
Senators John Cornyn and David Vitter have written to the president to say that using taxpayer money to help Greece through the IMF would violate a provision they included in a Wall Street reform bill last year.
They add that they think it is "highly unlikely" Greece would repay any IMF loans, with the Treasury Secretary expected to oppose any loans not expected to be fully repaid.
The meetings with Mr Lipsky and Mr Geithner are a high-level intervention by Mr Noonan in a bid to help Ireland's prospects at the next EU finance ministers' meeting as their support could prove crucial in striking a good deal next week.
The IMF has already said the Irish programme needed more support from Europe if it was to succeed.
While in the US, Mr Noonan has also been discussing the state of the economy -- including how the Government is striving to fix the banks -- with some of the big Wall Street financial institutions.
He met with Morgan Stanley, JP Morgan, Barclays Capital and others, where he outlined the basic facts about the economy and the challenges faced in the battle to reduce the huge debt burden and meet the programme for recovery.
Mr Noonan stressed much of the heavy lifting in tackling these enormous economic difficulties had been completed.
The process to sell Anglo Irish Bank's $10bn US loan book is also well advanced, with details of the sale to be announced within days. Anglo has appointed Eastdil to sell the US portfolio and will shortly be notifying prospective bidders about the sale process, which Mr Noonan said would be "open and transparent".