Our leaders must now take a harder line with Merkel and Sarkozy than before
Increasing our corporate tax rate would be economic suicide -- and it is the Government's job to prevent it, writes Michael McDowell
Early reports of the EU leaders' meeting on Friday indicate that while Greece was given both an extension of time and a reduction of interest on its bailout package, Ireland was refused any significant concession. Nicolas Sarkozy asked Enda Kenny for a "gesture" on our 12.5 per cent corporation tax rate. Well, he deserves a gesture -- but a gesture involving two digits and no other numbers.
The attitude shown by Sarkozy and Angela Merkel is predictable. France and Germany want to impose a uniform corporate tax regime across the EU. It is simply a question of exercising a demand for more power.
Corporate tax harmonisation would attract more and more corporate activity to the heart of the union and away from the geographical periphery. France and Germany do not want tax competition to act as a centrifugal counter-force to the centripetal forces of economic concentration that favour them.