Thursday 23 January 2020

Checks better late than never

CLAIM and counterclaim about the European Commission's proposal for more co-ordination of national budgets, culminating in uproar which led to an adjournment of the Dail yesterday morning and which is likely to resume today, are reminiscent of the hysteria that preceded the first Lisbon Treaty referendum in June 2008.

It seems a lifetime away now, but fears voiced then were of a loss of influence for Ireland in Europe, a perceived threat to our corporation tax regime, neutrality and workers' rights.

Polls showed that a third of the electorate thought that a 'Yes' vote would lead to the introduction of conscription into a European army.

Most of those concerns are forgotten now, or at least put aside, as the country grapples with a more immediate crisis. But paranoia about conspiracies to undermine our corporation tax regime is being revived. Fine Gael's concerns about corporation tax are understandable; at 12.5pc, Ireland's rate is about half the European average and its appeal to investors is envied by most of our EU competitors.

What's more, being paranoid does not mean they're not out to get you.

However, there is no reason to believe that tax harmonisation is part of the current proposal and every reason to believe that it is a genuine attempt to avoid a recurrence of the Greek debt crisis.

The resultant eurozone crisis has exposed weaknesses in EU decision making and fundamental problems that will not be easily solved.

They go back to the creation of the euro as a unique single currency area -- with one monetary policy but different standards of economic performance and different budgetary policies.

The potential for trouble was recognised and debated even before the euro was introduced in 1999, but concerns were overridden by the political momentum for a single currency.

The Athens government exploited what might be described as light regulation and was found guilty by Eurostat of committing "statistical alchemy" to gain admission to European monetary union. In other words, the Greeks lied about their deficits and got away with it.

Just days ago there was talk of monetary collapse and a break-up of the eurozone. Such an eventuality would damage this country more than most.

Belated attempts to introduce checks, which ought to have already been in place, should be welcomed.

Irish Independent

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