Brian Cowen (Laois-Offaly, Fianna Fail)

The Deputy said President Sarkozy has a view on corporation tax. He is entitled to that view; it is one that has been expressed on many occasions. I heard it at many ECOFIN Council meetings down through the years. One of my predecessors, Deputy Quinn, would have heard it a few times. Our corporation tax regime is simple and transparent, unlike the complicated system of allowances and reliefs that apply in some other countries which dramatically reduce their effective tax rates. Our corporation tax arrangements are compliant with the EU code of conduct on harmful tax competition. Our corporation tax yield as a percentage of GDP - our total tax revenues - is higher than the EU average and higher than in France. Our corporation tax arrangements are one element of our overall strategy for winning into Ireland and Europe investment, business and jobs that could otherwise end up in competitor areas like Switzerland, Israel and Singapore and while that is good for Ireland, it is also good for Europe. Increasing the rate would likely lead to a drop in economic activity and thus a drop in revenues. It would, therefore, run counter to the whole effort of Ireland's recovery plan, endorsed by the European Union and reflecting the EU-ECB-IMF funding arrangements. The OECD studies confirm that increasing corporation taxes represent the most harmful tax adjustment in terms of impact on economic growth.

I made these points on behalf of Ireland in the presence of all Heads of State and Government at the last European Council meeting. I made our position very clear, consistent with the sentiments I have just expressed. While the initiative will be studied and examined and we will take part in the discussions, we have made our position clear with regard to the corporation tax rate issue. As I said, the European Commission has indicated that it intends to bring forward a proposal for a common consolidated corporation tax base later this year. Ireland and many other countries are opposed to such an initiative, which in any event would require unanimous approval. It is noteworthy that even in this context, the Commission stresses that adjustment or harmonisation of rates is not envisaged. The Government has consistently and resolutely defended Ireland's corporation tax rate, including most recently at the time of the EU-ECB-IMF funding negotiations, and we will continue to do so. This confirms the clarity of the policy of successive Irish Administrations on this matter. This is well understood and does not require another phone call from me.

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