Corporation Tax 'An Absolute Red Line'

Finance Minister Brian Lenihan has declared retaining Ireland’s current Corporation Tax Rate of 12.5% is an ”absolute red line”.

Speaking yesterday evening, Mr Lenihan said that there would be no movement on the tax level during the international talks aimed at stabilising the Irish banking sector.

The current talks began yesterday, with the IMF, the European Central Band (ECB) and the EU Commission, and the Government's determination to save the tax rate are expected to extend negotiations into next week.

The Government is facing mounting pressure on the issue, as Germany and France attempt to use the highly competitive rate as a bargaining chip in the ongoing discussions for a multi-billion euro loan.

According to the Financial Times this morning, a French official has said the low corporate tax rate was seen by some elsewhere in Europe as “almost predatory”. “They [Ireland] need lots of money and we note they have a corporation tax rate that is very low. Supply must follow demand.”

However, the position was slammed by Director of the Irish Business and Employers Confederation, General Danny McCoy who said Ireland is a small, open trading economy and it is vital that the ability of Ireland's enterprise sector to drive growth and recovery is not undermined in any way.

"This would not be in Irish interests or in the interest of the wider EU."

In the Dáil yesterday morning, the Tánaiste Mary Coughlan made a short remark on the matter saying the tax rate is “non negotiable”.

The Enterprise Minister Batt O’Keeffe also stressed the Government’s determination to leave the rate unaffected at a press conference in Government Buildings.

"It is an aspect of taxation on which the Government is not for turning and it is vital that we keeping hammering that message home to the international investor community," said Minister O’Keeffe.

Foreign Direct Investment generates more jobs per head of population in Ireland than in any other country and foreign firms support some 240,000 Irish jobs, according to the Government.

(DW/KMcA)