Tax rate 'not negotiable' but pressure builds
Published 19/11/2010 | 05:00
CORPORATION tax will not be increased despite pressure from Europe to do so, ministers insisted yesterday.
This country has the third lowest tax on company profits of the 27 countries in the EU at 12.5pc.
Only Cyprus and Bulgaria -- at 10pc -- have lower rates.
Ireland's low corporation tax has long been a bugbear in Europe, as many countries believe lower rates give countries a competitive advantage when attracting multinational investment.
But pressure grew this week from French, Italian and Austrian finance ministers on Ireland to raise the rate in exchange for international financial help.
Tanaiste Mary Coughlan yesterday told the Dail: "The 12.5pc corporation tax is not negotiable."
Europe Minister Dick Roche also insisted the rate would not be changed -- despite comments from some domestic economists who believe the rate could be raised to 15pc without damaging competitiveness.
"The Government will do what is in the national interest and I don't give a toss if it is fashionable or not," he told the Oireachtas European Affairs committee yesterday.
So far this year, corporation tax, from multinational and indigenous companies, has contributed over €2.6bn to the Exchequer.
And unlike many other tax sources, it is already €473m ahead of target for this year.
Mr Roche added the Irish rate was not the lowest in Europe and multinationals were attracted here for other reasons.
While our rate is the third lowest of EU member states, it is the lowest in the eurozone countries where the average is 25.7pc. In some countries, like France, the rate is over 30pc.
Mr Roche's views were echoed by the financial services centre tsar and former Taoiseach John Bruton, who argued that Ireland had low corporation tax long before the EU had even been formed.
The American Chamber of Commerce, which represents firms that employ 95,000 people directly, is also resisting any changes to the rate.