Tax harmonisation plan greets Taoiseach at Brussels summit
TAOISEACH Enda Kenny arrived in Brussels tonight ahead of crunch talks over the next two days on finding a way to save Europe and its currency.
Key to the talks are a number of issues including changes to the treaty to allow for much tighter controls on national budgets in a bid to restore confidence in the region's solvency and to convince reluctant investors and stronger economies like Germany to back bailout funds.
The involvement of the European Central Bank and the International Monetary fund in the bailout of the region which has become the playing ground for many cash-hungry investors.
In a move that is likely to irk the Government, earlier France and Germany proposed a new EU agreement that would lead to the "harmonisation of corporate tax base" in the eurozone.
This does not automatically mean that our 12.5pc low corporation tax cannot be retained as the amendments relate to how the tax is calculated.
The plan is contained in a Franco-German letter sent to the president of the European Council, Herman Van Rompuy, and will be discussed when EU leaders begin deliberations tonight.
Ireland's low corporate tax rate has long been an issue with French President Nicolas Sarkozy, who would like to see it raised. In the letter, France and Germany also called for a financial transaction tax, which the Government fears would damage the highly successful financial services industry.
However, both proposals are extremely controversial and will be strongly resisted by at least half of the eurozone's members, one EU diplomat said.
Meanwhile, the EU's banking watchdog has announced a deterioration in the capital bases of a slew of Greek, Spanish and German banks including €13.1bn for the bank's in the area's biggest economy.
However, according to the latest figures Irish banks are fully capitalised.