Dutch finance minister backs Irish stand on corporate tax
THE Government's battle to retain a low corporation tax rate was given a boost last night, after the Dutch finance minister backed Ireland's position.
The comments will help bolster Ireland's fight against German and French pressure to increase the 12.5pc rate, in exchange for better terms on the €85bn bailout loans from the EU and IMF.
During an official visit by President Mary McAleese to the Netherlands, Dutch finance minister Jan Kees De Jager said that countries should be able to retain sovereignty on tax matters.
"We think that direct taxation is a matter of countries for themselves, so member states have to decide what level of taxation on certain taxes is appropriate," the minister pointed out.
"We don't specifically argue that the corporate income tax should be increased in Ireland," he said.
"But we do, of course, look at the total situation in Ireland and maybe some taxes do have to be increased.
"Then it's up to the Irish themselves whether they increase VAT, for example, or corporate income tax.
"It's a matter of national sovereignty whether or not to increase a specific form of tax.
"But, of course, the total level of taxation should be appropriate to generate enough income or to finance your government expenditures."
The comments were welcomed by Richard Bruton, Minister for Enterprise, Jobs and Innovation, who also pointed out that European governments can veto any proposed tax changes.
"It isn't a question of beggar your neighbour, this (corporation tax) is an essential element of Ireland export strategy, it has been for decades," he said.
"It's very important to provide investors with certainty and that has to be certainly around the tax regime and Ireland is determined to do that."
He also pointed out that a successful Ireland "trading its way" out of our economic downturn was good for Europe.
Yesterday evening, Mrs McAleese was guest of honour at a dinner hosted by the Nieuwspoort Association in The Hague, which Mr Bruton and the Dutch Finance Minister also attended.
In a speech to political and business leaders, she reiterated Ireland's determination to retain the corporation tax.
"The Irish love affair with Europe has not dimmed, though it has matured," she said, later adding that the Government was "strongly committed to maintaining a stable corporate tax regime. Modest economic growth is returning and our balance of payments will move into surplus this year," she said.
Despite Department of Finance figures showing last week that our growth forecast has been cut from 1.8pc to 0.8pc, Mrs McAleese was upbeat about our economic prospects and said that Ireland had become an even better place to invest as a result of the recession.
She pointed out that rents had dropped, the Government was working to reduce energy costs and one-quarter of private companies had cut wages by 12pc.