| 6.3°C Dublin

Raise business tax rate, FG told

The Fine Gael TD Peter Mathews has told Finance Minister Michael Noonan that he should increase corporation tax to secure the extra €500m the Finance Minister needs to balance the national books.

The suggestion was made by Mr Mathews at a pre-budgetary Plenary Meeting of the Fine Gael parliamentary party meeting last week.

Mr Noonan has to secure €1.25bn in extra taxation revenue in the next year. It is expected that property tax will raise €500m of this while the carry-over of additional taxes from last year's Budget will account for a further €250m.

However, the raising of a further half billion in extra taxes was a source of serious concern within the parliamentary party meeting.

This was alluded to by Mr Noonan who, according to TDs, told the meeting that "if we stick to our policy of no increases in taxes, no reductions in social welfare and if we remain committed to the concept Croke Park is off limits the room for manoeuvre is small".

The sacred cow status of Ireland's 12.5per cent corporation tax rate means it is unlikely Mr Noonan would be supportive of changes in the rate.

But at the Fine Gael meeting sources said: "Mathews claimed corporation tax would raise half a billion euros and not one industrialist would leave the country."

Such is the tightness of the fiscal scene, the party also heard suggestions that "a national recovery tax on high earners should be imposed for a number of years" which did not secure much support within the FG party rooms.

In the wake of the meeting the ongoing "untouchable" status of Croke Park was the source of much hostile comment. One source noted "the parliamentary party couldn't play on the Croke Park pitch so they were left playing on the sidelines".

Concern is rising that extra taxes will "collapse the domestic economy" with Fine Gael TDs warning that the mood "is growing within Fine Gael that property tax is the only new tax increase that should be imposed upon the electorate".

One source noted: "We understand Labour are the party of the public sector but the country cannot continue to be run for the sole benefit of 370,000 public sector workers."

Sunday Independent