Kenny and Merkel to clash over our bailout
Taoiseach insists higher tax will not be part of new deal
Published 11/03/2011 | 05:00
Taoiseach Enda Kenny will today battle to bring down the interest rate on Ireland's bailout -- hours after German Chancellor Angela Merkel insisted that the price of such a deal was an increase in our corporation tax.
At a summit of EU leaders, Mr Kenny will be pushing for a lowering of the 5.8pc interest rate on the bailout loans and an end to the protection of senior bank bondholders.
Ms Merkel indicated yesterday she was prepared to ease the burden of the bailout terms -- but only if the Government compromised on the corporate tax base.
Germany and several other countries want to prevent foreign companies, with few workers here, from paying a lower rate of corporation tax in Ireland.
Included among those are a number of international financial-services companies which use Ireland as their financial base to avail of the 12.5pc corporate tax rate, but do most of their business elsewhere.
Ms Merkel set down a condition that any u-turn by Germany over interest paid by Greece and Ireland for loans would have strict terms attached.
Mr Kenny said the Government's position was quite clear and he rejected any idea of concessions on the corporate tax rate or base.
He described any effort to change the tax base as an attempt to reduce our tax rate "through the back door".
"Obviously, there have been discussions going on in Europe about this for quite some time. But in so far as Ireland is concerned, we have been very consistent, very solid, and will continue to be so, both in terms of the tax base and the tax rate," he insisted.
Elsewhere yesterday, European Commission President Jose Manuel Barroso again backed Ireland's demand for a lower rate on the bailout.
In his first international engagement as Taoiseach, Mr Kenny held what were described as "positive and frank" talks with Mr Barroso in Brussels.
Mr Barroso said he understood the interest rate on the Irish bailout was a major issue and the Commission supported this country.
The Commission President also reiterated the importance of getting to the bottom of the problems in the banks.
A summit of all EU leaders will also discuss the crisis in Libya today. Tanaiste and Foreign Affairs Minister Eamon Gilmore spoke with EU Foreign Affairs chief Catherine Ashton yesterday ahead of a separate foreign ministers' summit in Hungary this weekend.
Meanwhile, Mr Kenny was also forced to defend his decision to appoint 15 junior minister -- after promising exactly two years ago today to reduce the number of posts to 12.
Before leaving for Brussels, Mr Kenny named the 15 junior ministers -- nine for Fine Gael and six for Labour.
Mr Kenny appointed the same number of junior ministers as the outgoing government on €130,000-per-year each.
Mr Kenny admitted he had made the commitment two years ago, but said it had not been included in Fine Gael's general election policy or the coalition's Programme for Government.