Brian Hayes (Dublin South West, Fine Gael)

----- nine or more countries could go it alone, which would immediately bring the proposal that step closer to implementation. In staying with these negotiations and being actively engaged we can make the case as to why we are so opposed to the introduction of the Commission's CCCTB proposal. It is in our national interest to remain engaged on this matter, not to run away from the debate and to continue to make the case from our own perspective and the perspective of many other countries where the implementation of this proposal would be entirely negative towards their economies. We are willing to engage with the Commission and other member states on the issue provided the principle of unanimity on taxation matters is fully respected. All indications would suggest that the publication of the draft directive is only the beginning of a very long process. After all, the question of harmonising company taxation in the European Union has been around for a number of decades and we can anticipate many more years of work before any final proposal will fall for consideration.

The House will be aware that the limits of the European Union competence as governed by the principle of subsidiarity are set out in Article 5 of the Treaty on European Union, which, inter alia, states: "the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level." National parliaments have a role in ensuring compliance with the principle of subsidiarity as laid out in the Article 6 of the protocol on the application of the principles of subsidiarity and proportionality. In accordance with Article 5 of the same protocol, the European Commission, which has the right of initiation in legislative proposals, is required to justify all legislative proposals from the point of view of subsidiarity. In this respect the Commission argues in its proposal that a co-ordinated action at EU level is necessary to achieve the desired end and that the fundamental concept of the CCCTB can only be implemented by a common approach within the European Union.

In recognition of the terms of the article of Protocol 2, the preliminary view submitted by the Department of Finance to the committee suggested that it was arguable that the proposal does not infringe upon subsidiarity. However, my Department was very clear in that this was only a preliminary view as Deputy Costello has rightly said and that the Department might wish to alter its view following a more detailed examination of the proposal and discussion at the Council working group. Considerations that would impact on that preliminary view would include the question of a compulsory system rather than an optional system and whether the consolidated element of the proposal would be dropped at some future date. A proposal without consolidation would have a much reduced impact on member states' tax revenues. Furthermore the requirement for a unanimous vote at the Council gives sceptical member states the possibility to discuss all of their concerns, including subsidiarity as discussed on the proposal development.

The Department of Finance preliminary view is the view of the Government, including the Minister for Finance, and my own view. The Minister's view was based on a very narrow interpretation of the principle of subsidiarity. The Minister for Finance made it clear that there would be plenty of scope to develop that view as discussions progressed. The committee decided to take a broader view of subsidiarity as a principle, which was perfectly within its right, just as the Dutch and British Parliaments did in that matter. It is, of course, a matter for the House to decide whether it wishes to send a reasoned opinion that would range wider than subsidiarity alone. In that respect I note the report and the opinion of the Standing Order 103 Select Committee. I congratulate committee members and thank them for the work they put into this report, which has been laid before the House.

I echo the remarks of the Minister, Deputy Noonan, at today's ECOFIN meeting on the question of trying to reduce the interest rate charged on the package of funds from the EU. A new approach seems to be developing within some member states - a minority view, I suspect - that in order for a concession to be given, a member state must give something away. I believe that will produce a kind of political gridlock within the Union and is not in the Union's long-term interest. It is certainly not the European way. In many respects it makes it more difficult for countries like Ireland, which are part and parcel of a programme of funds provided by the EU and IMF, to find a way out of the very difficult economic situation we face. I reiterate the view of the Minister who made it absolutely clear in Brussels today that a more workable solution needs to be found. We will not give way on our vital national interest. The vital national interest of the country remains that the 12.5% corporation tax rate should remain. At a time of economic crisis the last thing a country does is to bring uncertainty to bear. Any reduction in the corporation tax rate at this stage would be economic suicide for this country at a time when we need certainty about our corporation tax rate and certainty about the potential of investment to continue to come into the country as it has so ably in the past.

That is the view of the Government on the issue. We remain committed to the reduction in the interest rate on the EU portion of the funds to this country. We continue at a bilateral and multilateral level to work with that, but we will not concede on vital national interests that the Government will absolutely defend as I believe all Members and parties in this House equally defend.

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