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Parties clash on corporate tax control

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Finance Minister Paschal Donohoe. Photo: Frank McGrath

Finance Minister Paschal Donohoe. Photo: Frank McGrath

Finance Minister Paschal Donohoe. Photo: Frank McGrath

Fine Gael has claimed that a Fianna Fail election manifesto commitment would potentially hand control of Ireland's corporation tax rate to the EU.

In a fresh election row, Finance Minister Paschal Donohoe suggested that Fianna Fail's manifesto proposal to "build a real and fiscal transfer union to prepare for future downturns" at an EU level amounted to potentially giving up the State's veto on any changes to its 12.5pc corporation tax rate.

Fianna Fail finance spokesman Michael McGrath dismissed the suggestion as "scaremongering" and "laughable".

Speaking to the Sunday Independent, Mr Donohoe said: "They are proposing to build a real fiscal and transfer union and I am calling on Fianna Fail to explain do they know what that is because it involves the centralisation of really important taxation decisions.

"Many will interpret it as changing the way tax policy is made and the way the corporation tax rate is set.

"A real fiscal and transfer union and the real fiscal union means not all tax decisions are taken by national governments and I want them to explain do they know what that means and if they know what that means why are they committed to it?

"It means nation states share decision-making in relation to tax policy."

But Mr McGrath hit back last night and insisted that his party was committed to defending the 12.5pc corporation tax rate.

He said: "What we are seeing here again is more scaremongering from an increasingly desperate Fine Gael.

"Fianna Fail has a proven track record in defending Ireland's tax sovereignty and that will continue into the future.

"We are committed to defending the 12.5pc corporation tax rate. This is, after all, enshrined in the Lisbon Treaty.

"It is laughable that the minister is throwing such ludicrous accusations given that Fianna Fail has been consistently calling on him to take a tougher stance on the European Commission's plans to introduce the Common and Consolidated Corporate Tax Policy."

The men clashed during an RTE Radio debate yesterday where Mr McGrath said he was disappointed after Mr Donohoe called his party "spineless" after Fianna Fail had "stood up to the mark and provided stability to the Government".

Mr McGrath said he would be a "safe pair of hands" if he was to be the finance minister in the next government.

Sunday Independent