Tuesday 6 December 2016

Brendan Keenan: Two certainties: death and EU tax plans

As debt/tax row intensifies, the choice facing Ireland may not be as simple as a 'No' to corporation tax change versus a 'Non' to lower interest rates

Published 20/03/2011 | 05:00

FOR a practitioner of calculated, cynical "realpolitik," it's not really a difficult choice -- whether to continue paying 6 per cent plus on the bailout borrowings, or agree to increase corporation tax in return for a reduction of, at most, 1.5 percentage points on the rate.

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Debt, after all, is just a promise. A new corporate tax regime is for ever. Indeed, if Enda Kenny shares the widespread view that some restructuring of Ireland's national debt is inevitable, then the answer seems obvious. Stick with the low corporation tax.

The purpose of any ultimate debt renegotiation would be to reduce the interest burden to something which is affordable. In which case, it hardly matters what rate is paid on the bailout now. The lenders will carry the cost in the end, through a bigger loss on their loans.

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