Noonan 'won't budge' in EU corporation tax-rate row
THE Government last night insisted Ireland would not be forced to accept French and German demands to change our corporation tax regime.
Finance Minister Michael Noonan will today table fresh proposals in Brussels in a bid to break the stalemate on attempts to ease our debt bailout burden. He will also seek backing from the EU for new measures to stabilise the country's banks.
It comes just two days after Taoiseach Enda Kenny fought off demands from French President Nicolas Sarkozy and German Chancellor Angela Merkel for an increase in Ireland's 12.5pc corporation tax rate.
Justice Minister Alan Shatter yesterday said such a move was "off the table" and government sources said there was a perception that France and Germany are "throwing their weight around", with smaller countries set to turn to each other for help. Mr Noonan will meet eurozone ministers today and will also have a one-on-one with ECB president Jean-Claude Trichet. He will then have another meeting tomorrow with all 27 EU finance ministers.
The European Commission is due to publish proposals for a common set of rules for payment of corporation tax by companies on Wednesday.
"The 12.5pc is crucial in terms of the multinationals who are established here," Mr Shatter said. "It isn't an issue. There's a united view across the Dail, that this is an issue on which we must stand firm."
A government source last night also sounded sceptical that the common base would be brought into law.
"We've been talking about a consolidated tax base for 10 years and the likelihood is we'll be talking about it for the next 10 years," a source added.
Ireland could expect support over any move to alter the corporation tax rate from smaller countries such as Cyprus, Malta, Slovakia and Estonia as well as Britain.
"There is a perception that France and Germany are throwing their weight around and they're moving away from the community method, and small states like us look to the community method when it looks like there are inter-governmental negotiations going on," the source added.
Mr Noonan is expected to ask for greater measures to ease the pressure on the Irish banking system, including an EU "working group" to examine options for medium-term funding for the banks. He is also expected to raise the possibility of a statement from the ECB that it will ensure the medium-term funding of the Irish banks.
Another alternative proposition is that the EU bailout mechanism be used to insure lending by bond markets to Ireland to encourage private lenders to take over the funding of the banks from the ECB.
The Government wants it politically recognised that the banking problem is now too big for the Irish taxpayer to handle on its own.