Monday 26 February 2018

Corporation Tax: New French assault on rate as EU gathers reporters and Geoff Meade

A FRENCH MP – a member of President Nicolas Sarkozy’s ruling UMP party – today slammed Ireland’s low Corporation Tax rate, a clear signal of continued anger in Paris over the issue as EU leaders prepare to meet.

Today centre-right EU leaders gathered in the southern French city of Marseille, ahead of the crucial summit in Brussels.

According to Jacques Myard, the French people feel ‘‘very strongly about the issue’’.

"How is it that we are helping, for instance Ireland, that they are getting from Brussels our money.

"Some people say 'Okay, we help you, but you also have to help yourself by raising your own taxes and not having a kind of advantage which is unfair competition to our enterprise'."

Only this week Taoiseach Enda Kenny resolved to maintaining Ireland's low corporate tax rate of 12.5pc in the Budget.

Earlier today he joined European centre-right leaders in Marseille for a meeting ahead of the Brussels summit, which begins tonight.

Most of the EU leaders are from the European People's Party.

On the agenda are France and Germany's proposals to end the eurozone debt crisis, including tougher and more immediate sanctions against countries that breach the guidelines on budget deficits.

Meanwhile, David Cameron faces a Franco-German steamroller today, determined to push through sweeping financial changes in Europe and restore the stability of the single currency.

Paris and Berlin will call for a raft of new financial measures applying to the 17 eurozone countries, at the Brussels summit.

British Prime Minister Mr Cameron and the other non-eurozone leaders in Europe will be told that, with or without their blessing, the eurozone group intends to press ahead with the necessary treaty change within months.

Proposals from German chancellor Angela Merkel and French president Nicolas Sarkozy were set out last night in a letter to summit chairman Herman Van Rompuy.

As well as tough new controls on eurozone economies, including automatically-triggered sanctions if eurozone states breach debt and deficit criteria, the pair are calling for a tax on financial transactions within the zone, common corporate tax rates and harmonised employment rules.

Mr Kenny will defend Ireland’s cherished low corporate tax rate against a higher single rate for the eurozone.

Mr Cameron is believed to be relaxed about the 17 eurozone members pressing ahead with a financial transactions tax, on the grounds that it would drive more business towards the City of London. He has refused to back an EU-wide tax, however, because it would drive business out of London unless applied globally.

His summit concern is that a tighter-knit "inner core" of 17 countries with their own treaty and financial controls would risk Britain being absent from decisions directly affecting the country - particularly on the EU single market and financial services rules crucial to the City of London.

"We'd rather be in the room when there is an issue which directly affects out national interest being discussed" pointed out one official.

EU leaders will meet for dinner tonight in Brussels and the first round of summit talks to try to hammer out a long-term eurozone stability deal.

And as the latest crucial summit unfolds over tonight and into tomorrow, Mr Van Rompuy himself will be pushing for a different scenario in which existing EU rules are used to enable tougher economic controls to be agreed without a treaty change - and without the need for ratification of the move by national parliaments.

The scene is therefore set for a complex, lengthy, and fractious summit stand-off over how to provide the kind of assurances markets are demanding about the eurozone's long-term prospects.

In addition the summit is supposed to work out how to implement more immediate answers agreed at the last summit to boost an existing EU bailout fund and pay Greece the latest slice of the bailout money that is keeping its economy afloat.

The letter to the summit from Chancellor Merkel and President Sarkozy - now clearly in the driving seat as the eurozone crisis deepens - calls for "a renewed contract between the Euro area member states".

Some countries around the table are concerned about the scale of Franco-German dominance of the EU club, European commissioner Laszlo Andor told the BBC's World Tonight programme.

"Very often when we (the EC) speak with other member hear a certain disappointment and or even bitterness about how certain deals or bargains are handed out without the official meetings... and other countries might be taken for granted."

The summit starts tonight, overshadowed by a warning from credit ratings agency Standard and Poor's that the EU may face a downgrade of its triple-A credit status because of the eurozone crisis - making it even harder for EU leaders to calm market fears about the single currency's future.

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