Seanad debates

Wednesday, 22 October 2003

European Convention/Intergovernmental Conference: Statements.

 

I was happy with most of the wording of the short explanatory guide to the draft treaty establishing a constitution for Europe which the Department of Foreign Affairs issued and to which Senator Lydon referred. It explains what we are seeking but I have a question on taxation. I know we argued very strongly for unanimity in the tax area and that we made it clear it is something on which we have strong views, as have some other countries. Has our determination to achieve that focused our attention so strongly that it weakens the attention we can give to other areas? We have had the benefit of a low corporation tax for the past number of years and our 12.5% rate is the envy of a number of businesses elsewhere in Europe. The accession countries to the European Union will consider using such a tax as a weapon to give them an advantage. Cyprus has recently introduced a 10% corporation tax undercutting ours. It is possible that some of the Eastern European accession countries who will join the Union next year have considered having a zero tax in this area. Rather than our commitment which provides that there should be unanimity, and under no condition should we give way on that, is there a possibility of having some sort of a compromise? I would like to think we could say something which would be in our interest to the effect that there should be a minimum corporation tax of 12.5%, which is our rate. I am sure that would not be acceptable to the larger countries who have rates much higher than that, but such a measure would benefit us by ensuring our rate would not be undercut. In suggesting that, I am not speaking from the perspective of a truly European ethos and culture and saying we are equal, but wearing a commercial hat and saying what is in the best interest of Ireland in this area. Given our commitment over the years, the benefit we have had from having a low tax rate and our determination to maintain unanimity in voting, is there a danger we will lose the opportunity to secure a compromise which might be in our own interest on that basis?

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