By Andrew Lambe, 19th October 2010.
The Irish Government has again reiterated its commitment to Ireland’s highly competitive Corporation Tax rate of 12.5%, despite an unwelcome attempt from EU Commissioner Olli Rehn to stir trouble by declaring ‘Ireland will not continue as a low-tax country’
Minister for Finance, Brian Lenihan issued a statement on behalf of the Irish Government re-affirming Ireland’s long-term commitment to the 12.5% corporate tax rate as “a cornerstone of Irish economic policy.” “Commissioner Rehn made comments in relation to taxation levels generally in Ireland. The Minister has acknowledged that taxation will form part of the solution to our fiscal problems and stabilising the deficit. With regard to the corporation tax rate, the Government has always made it clear that the corporation tax rate will remain at 12 ½ % as set out in the Programme for Government. This is still the case. This commitment is protected, in an EU context, by the principle of unanimity in taxation matters. That was further enhanced by the insertion of a legal guarantee in the Lisbon Treaty. The 12 ½ % corporation rate is a cornerstone of the Irish economic policy” This unambiguous declaration by the Minister should dispel any disquiet in the international marketplace as to Ireland’s long-term commitment to international investors and businesses who seek to locate here. A competitively low corporate tax regime to encourage and promote increased inward direct investment has been a fundamental part of the Irish tax policy since the 1950s and, in many respects, is just as relevant today in achieving our budgetary objectives. In the view of many economic commentators, “the 12.5% corporate tax rate is part of the solution, not part of the problem”.
Fine Gael leader Enda Kenny also promised to retain the 12.5% rate when he recently welcomed the announcement of 250 new jobs at the Hollister healthcare multinational in Ballina, Co Mayo. “I was a member of the Government which introduced this level of tax in the late 1990s,” Mr Kenny said. “Tax matters are a matter for each country and are confirmed by the Lisbon Treaty which the Irish people voted on by referendum. “Any increase would be a major breach of trust with international business, particularly US business,” Mr Kenny said.
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