Pat Breen (Clare, Fine Gael)
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Question 8: To ask the Minister for Finance if he has exercised his powers to block the emergence of a common corporate tax base; and if he will make a statement on the matter. [12506/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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As I informed the House on 28 February, the European Commission has not yet made a formal proposal on the common consolidated corporate tax base. At the informal ECOFIN in September 2004, it was agreed that the Commission should establish a technical working group to consider such matters. While we opposed such a move, we are participating in the group without prejudice to our national position of opposition. As there is no proposal currently being examined by the European Council, the issue of exercising a block does not arise.

Richard Bruton (Dublin North Central, Fine Gael)
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I welcome the Minister's opposition on the issue, and it appears this is the thin end of the wedge. We recently had the Commissioner for Taxation and Customs Union, Mr. László Kovács, speaking in the restaurant of Leinster House. It seemed to me that this was a Trojan horse in their view, and once the proposal was inside the tent it would mount enormous pressure on those who, like ourselves, believe they should have the freedom to set tax rates and codes. How does the Minister feel the issue will evolve? Does he foresee a danger of Trojan horse being created through this mechanism?

Brian Cowen (Laois-Offaly, Fianna Fail)
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I met Commissioner Kovács and his officials when he visited and spoke in the environs of the Dáil. I conveyed our opposition to the overall project and told him I was not at all convinced of the case put forward. The Commissioner is resigned to the fact he will not get agreement among all 25 member states, but he is prepared to go the route of enhanced co-operation. He proposes to publish a stocktaking communication shortly and it is expected that the current Austrian Presidency will put it on the June ECOFIN agenda to get an overall view from member states.

As stated, we oppose it for both principled and practical reasons. Taxation is a matter of national sovereignty for each member of state. The right to choose the level of public spending and the funding of such expenditure is a basic function of the democratic process. It is necessary to protect the flexibility of tax policy in rewarding enterprise and the creation of jobs and growth in the economy. There is no evidence to suggest a common, consolidated, corporate tax base would address issues such as competitiveness, compliance costs for companies, transfer pricing etc. It would not simplify EU tax issues as the so-called optional system proposed would add another tax system to the existing 25. The harmonisation of the base would lead to pressure on national tax rates and the code of conduct on business taxation already successfully addresses harmful tax competition.

The CCCTB cannot be imposed on member states. Unanimity is required on all decisions taken on taxation issues at EU level. We are happy to discuss how to deal with taxation issues on that basis and we have done so. Enhanced co-operation may only be engaged in as "a last resort" but we are a long way from such a position as a proposal must first come forward from the Commission. The timeframe it is talking about extends to 2008, which in our view is unrealistic, notwithstanding our strong opposition to the project — we feel the Commission may be down-playing the level of opposition among some member states.

Dan Boyle (Cork South Central, Green Party)
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Does the Minister accept there is cross-party consensus in opposition to corporation tax harmonisation across the European Union? What is his opinion on the agreements that exist in other areas of taxation? There is already agreement on low level energy tax and there have been proposals by President Chirac for an aviation tax for developing a fund for a common EU approach to foreign aid. Has the Government articulated its position on those and other common tax issues in the EU?

Brian Cowen (Laois-Offaly, Fianna Fail)
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It has. We have decided to fund our foreign aid through direct grant-in-aid, rather than via an aviation tax, because it is far more transparent. There is an issue with certain nations' dependence on aviation and the effect on our costs, which would be different from that of others. It has been decided that countries can deal with the issue on a voluntary, optional basis themselves. I respect those member states who see it as a feasible means of providing support for the Third World but we do so through direct grant-in-aid and the relevant subhead has received among the largest increases in recent years.