Dáil debates

Tuesday, 7 June 2011

3:00 pm

Photo of Michael NoonanMichael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)

The Deputy is familiar with the situation. The European Commission has stated publicly that it is in favour of the reduction in the interest rate applying to Ireland, the IMF has stated publicly, through its acting director, Mr. John Lipsky, that the reduction should apply to Ireland and the OECD has stated that the reduction should apply to Ireland. However, the decision is made at the meeting of 27 member states and there must be unanimity. At present, France has been very vocal in opposing the reduction and Germany is also opposed to the reduction, although it is less vocal.

The French position is that because there is a recommendation to reduce the interest rate in Ireland, a quid pro quo must be given by Ireland - in other words, an additional condition must be added to the memorandum of understanding. The condition the French are seeking is an increase in the 12.5% corporation tax rate for Ireland, which we are refusing point blank. We are also refusing to make any variation on the tax base, although we are prepared to participate with all our other colleagues in the discussion on the paper being produced by the Commission on the CCCTB. We have no problem with a full discussion and we will discuss any issue.

The value of the reduction is being exaggerated and, in my view, too much is being made of this. The Deputy knows how it works with the different funds in that there is eventually a blend of interest rates. The Portuguese got 60 basis points. If Ireland were to get the same as Portugal, it would mean €148 million a year, and if we got what Greece is supposed to have got but may not retain next month, the figure would be just over €200 million. There is no way whatsoever that I will negotiate with anyone in the French Government to concede anything on the Irish corporation tax rate for that amount of money.

The last Government committed to a fiscal adjustment of €6 billion in 2011 - targets we are working to meet - and the commitment for 2012 is €3.6 billion, giving a total of almost €10 billion. Does anybody think we will give away the heart and soul of our industrial strategy for €150 million? This is not real. To those who are opposing us and trying to force us to change our corporation tax rate, I tell them once more today that they have no negotiating position because the amounts of money are so small in regard to the adjustments we are being required to make that we will not concede.

We will be reasonable. If they suggest something we can agree with elsewhere in the programme, we will talk to them. If, for example, they want harder fiscal rules going forward, I am in favour of those anyway and would be prepared to negotiate them. I am prepared to be communitaire and to be European - that is kind of tradition I come from and it is what I believe in. However, I will not be waltzed around by any member state, especially when the gain is so small in contrast to the potential industrial promotion.

As a final point, I note that what is going best in Ireland at present is export-led growth, which is where GDP is growing. It is what is giving us a balance of payments surplus and where the jobs are being created, particularly jobs for bright young people. Does anybody think we will give this away for the sake of a small reduction in interest rates? It is not on.

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