It’s the issue that is never quite tucked into bed. The Republic’s low corporate tax rate of 12.5 percent could be back in Europe’s crosshairs in the context of potential changes to the European Union’s fiscal compact treaty, a document that is will have potentially profound effects on the Irish economy for years.
Taoiseach Enda Kenny and Tánaiste Eamon Gilmore have both has insisted that Ireland will not budge on the rate.
Speaking in Dublin at an event hosted by Bloomberg, Mr. Kenny said any changes to the country’s tax regime would not be in Ireland’s interests.
“Ireland will support a growth agenda,” he said in reference to calls for growth initiatives to be added to a treaty which, thus far, has been written up with austerity as its main thrust.
“Ireland will support a development agenda. But there are clearly other issues in there with which we don’t agree. Changes in the corporation tax rate and localized financial transaction taxes are not in the interests of this country,” the taoiseach was reported as saying in a report carried by the website, breakingnews.ie.
Separately, Tánaiste Eamon Gilmore said that “as far as Ireland is concerned, our rate of corporation tax is established, it’s not going to change.”
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According to the report, the long-running debate resurfaced when an advisor for new French president, Francois Hollande – who has pushed for the treaty to be amended to include growth measures – said France may promote a harmonized rate of corporation tax across Europe.
However, Mr. Gilmore said that Ireland should stick to its rate to provide certainty to potential investors and to ensure growth in the domestic economy.
“We don’t intend to change our position in relation to our corporation tax, that’s absolutely firm. We have to provide certainty to investors by being clear that our rate of corporation tax is not changing and also indeed by passing the stability treaty, so that they have confidence in the euro and confidence in Ireland,” Gilmore said.
The 12.5 percent rate has been a critical factor in attracting overseas corporations, most especially U.S. companies, to base their European operations in the Republic.
The North’s corporate tax rate is higher though politicians in Belfast have been pressing the London government for a reduction that would put the North on par with the Republic.
The news French president, meanwhile, is picking up where his predecessor, Nicolas Sarkozy, left off in honing in critically on the low Irish rate.