News Irish News

Friday 20 October 2017

MEPs plead with EU to give tax rate three years' grace

Sarah Collins and Aine Kerr

IRISH MEPs yesterday pleaded with EU economics chief Olli Rehn to protect Ireland's corporation tax rate for at least the next three years.

The 11 Irish MEPs held a "confidential" meeting on the economic and banking crisis with the Economic and Monetary Affairs Commissioner in Strasbourg yesterday morning.

The meeting between MEPs and the commissioner focused on the need to urgently pass the Budget and to retain the 12.5pc corporation tax rate over the next three years.

Socialist Party MEP Joe Higgins walked out of the meeting after just two minutes. He objected to the terms and conditions of keeping the meeting confidential.

Failure to share information with the wider public would be a "betrayal", Mr Higgins said.

The Government has repeatedly insisted the tax is protected under the EU's Lisbon Treaty and does not feature in current discussions with the International Monetary Fund (IMF).

But MEPs remain concerned the tax rate could reappear in negotiations next year or the year after when Ireland's progress is reviewed.

Under the proposed rescue package, the EU and IMF will make enough funds available so Ireland does not have to borrow from the financial markets for the next three years.

Only last week the Italian finance minister said the current corporation tax rate of 12.5pc may have to be "phased out" as part of the talks with the IMF on a rescue package.

All 11 MEPs again stressed the importance of retaining its current low level at yesterday morning's meeting with Mr Rehn.

Independent MEP Marian Harkin last night claimed the commissioner had not suggested that hiking the tax rate was on the negotiating table.

"He didn't indicate to us any appetite in the commission to bring corporation tax into the equation," she said.

United

Labour MEP Alan Kelly said all parties were united in their drive to tone down the debate.

"We all stressed the need for more consideration before any more commentary is [levelled] at Ireland's corporate tax rate," he said.

Fine Gael MEP Gay Mitchell insisted it was "not the time to be raising these issues" and said he understood the tax rate was not on the agenda as a condition for Ireland's rescue package.

Fianna Fail MEP Brian Crowley said Mr Rehn had "fully recognised" that the corporation tax rate is a matter for individual member states.

Privately, Opposition parties are concerned there could be pressure in future to tweak the rate and are anxious to get a guarantee it will not be touched over the next three years, and not just this year.

Following the meeting, Fianna Fail's Pat the Cope Gallagher said the commissioner had emphasised the "extreme importance" of passing the Budget as soon as possible.

Any delay could create "uncertainty" at a time when there is an urgent need to stabilise the markets.

Fianna Fail's Ireland East MEP Liam Aylward said it was "imperative" the Budget is passed as soon as possible.

"Each day will cost us more. That's the way it is," Mr Aylward said.

There are serious concerns in Brussels for the state of the banking sector, which is currently dependent on liquidity from the European Central Bank.

Some sources say the Commission is over optimistic about the prospects of getting the budget passed, given the upheaval in Dublin.

Labour MEP Nessa Childers said there is a danger the Budget might be delayed, but added: "Isn't that better than the instability we have now?"

President of the European Council of leaders Herman Van Rompuy also called for a "rapid" end to the negotiations between the EU, European Central Bank, IMF and the Government in Dublin.

"We all strongly support the important efforts undertaken by the Irish Government to address the fiscal situation and to implement structural reforms," he said after meeting Swedish premier Fredrik Reinfeldt, who has promised at least €1bn in aid to Ireland.

"We look forward to the rapid conclusions of the ongoing negotiations for a programme," Mr Van Rompuy said.

Irish Independent

Editor's Choice

Also in Irish News