Sarkozy's grandstanding on our corporation tax misses the point
Whatever funds we got from the EU are rapidly being funnelled back to private European banks, writes Colm McCarthy
President Sarkozy's attack on our corporation tax rate last Thursday was grounded in his perception that Ireland is the fortunate beneficiary of fresh financial aid from Europe's taxpayers.
This, he feels, should be reciprocated through Ireland altering a long-established domestic taxation policy, a prerogative unambiguously reserved to the member states under the European treaties and the subject of an explicit commitment at the time of the second (successful) Lisbon referendum. He went on to assert his respect for the independence of his 'Irish friends', a group likely to have dwindled over the last few days.
From an Irish perspective, what looks to him like financial assistance from Europe could as readily be characterised as a bailout of European investors foolish enough to lend to Anglo Irish Bank and other insolvent banks, courtesy of the Irish taxpayers. The markets having declined to finance this commitment on top of the Irish sovereign debt, our European friends have kindly provided 'assistance' in the form of loans at a mark-up of three per cent on the cost of funds. That Irish and French perspectives can diverge so sharply is testament to the extent of the muddle and indecision in dealing with the European banking crisis.