Business World

Saturday 19 October 2019

Sarkozy to attack corporation tax under new budgetary rules

French President Nicolas Sarkozy
French President Nicolas Sarkozy

Shona Murray and Fionnan Sheahan

FRENCH President Nicolas Sarkozy is planning an attack on Ireland's low corporation tax in EU negotiations on tough new budgetary rules.

Taoiseach Enda Kenny will face another battle to defend corporation tax, which the French government has repeatedly targeted.

A senior French official said yesterday corporation tax is "on the table" as the new deal, called the fiscal compact, agreed by EU leaders last weekend is hammered out in detail.

Corporation tax was not mentioned as an element of the deal in Brussels at the weekend.

The Government has pledged to engage with proposals being put forward by the European Commission on a common tax base, but claims the corporation tax system here is protected.

However, the chief of staff to the French European Affairs Minister said while his government understands corporation tax is a "key element" of the Irish system and the recovery, there cannot be "too much divergence". Christoph Parisot, who also acts as spokesman for Minister Jean Leonetti, outlined how Germany and France will have the same corporation tax base and rate from 2013.

"The fact is it's one of the key subjects on the table. There are proposals from the Commission already, and if it can be sped up, let's try do it because this is something we will have to do," Mr Parisot said.

"At the same time, there are really important things to be done. We all need to keep to our words and just try to work as constructively as possible, knowing that it is always going to be very difficult to have 26 common policies in all areas and that every country will want to keep a type of specificities, but at the same time, we cannot have too much divergence into things.

"There is certainly going to be a tremendous impetus for trying to go as far as possible in all areas. And I say as far as possible," he added.

Mr Kenny insists no decision can be made yet on whether a referendum is needed to ratify the new deal.

Fianna Fail leader Micheal Martin said, from a political perspective, the country needed a referendum; while Sinn Fein president Gerry Adams said it was a bad deal for Ireland. Mr Kenny said he raised the case for reducing the cost of Ireland's bailout of its banks with European leaders at last week's summit.


"I presented the case, the challenge that is now faced by the Irish people, where this county borrowed €63bn for bank recapitalisation at excessive interest rates before the bailout," he said.

"We should now be able to use the current facilities that are available under the EFSF, and will be available under the ESM, to get into a position where we can pay off that at lower interest rates over a longer period with a very substantial saving for the Irish taxpayer," he added.

The Government wants access to every fund available from the EU to help reduce the burden, by lengthening the time for repayment and reducing the interest rates.

From the French side of the table, Mr Parisot said EU members wanted to be "balanced and fair with all countries".

But he pointed out Ireland has already received concessions on the bailout.

"Something has already been done for Ireland in July by aligning the rate (on the bailout) with the lower rate," he said.

Irish Independent

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