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EU 'no threat' to Republic's low corporate tax

Brian Cowen has said EU plans will not threaten Ireland's low corporate tax rate
Brian Cowen has said EU plans will not threaten Ireland's low corporate tax rate

The Taoiseach has strongly rejected Fine Gael claims that Ireland's low corporate tax rate would be threatened by sweeping plans to co-ordinate the budgets of EU member states.

The chief opposition party drew strong Government criticism after its finance spokesman Richard Bruton claimed the move could jeopardise the prospect of economic recovery by forcing higher taxes on homes and business.

But Brian Cowen stressed the 12.5% rate, credited as helping create the Celtic Tiger boom in wooing multinationals, was not going to change, he said: "The proposal that is coming from the commission is not, never has been and never will be any threat to our corporation tax rate."

Under the proposals, the European Commission is looking to compel eurozone countries to submit draft budgets to Brussels before they are presented in national parliaments, but Mr Bruton said the process could be influenced by the political affairs of other member states.

"And there are to be penalties immediately if you fail to comply with the view of the Council of Ministers. That is before the Dail has ever seen or had a chance to debate the appropriateness of the strategy involved," Mr Bruton said.

He called on the Government to demonstrate the state's commitment to protecting the tax rate, saying: "It's about the obligation of the Irish parliament to develop an economic strategy that suits our needs and responds to what Europe as well as what Ireland needs.

"We do not want to see that closed off from democratic debate. Stitched up between a Government which doesn't know what the country needs and a European Council whose agenda we don't yet know."

Finance Minister Brian Lenihan launched a withering attack on Mr Bruton over his stance, accusing Fine Gael of whipping up entirely unfounded anti-European sentiment.

The issue was again raised in the Dail, with Tanaiste Mary Coughlan insisting Ireland's sovereignty was not an issue, she said: "It is true to say that a shared interest in an enhanced economic co-ordination throughout that zone is appropriate."

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