A group of German MEPs has been trying to force the European Union into making Ireland increase its corporation tax rate in return for a bailout by the EU.
German MEPs from the largest group in the parliament, the European People’s Party (to which Fine Gael belongs), and the Green group, put the idea to Jean-Claude Trichet, the president of the European Central Bank.
Werner Langen of the EPP said that Ireland was guilty of “massive competitive distortion on corporation tax,” while Markus Ferber, also of the EPP, and Sven Giegold, of the Green group, said that if Ireland’s economy continued to decline then it would be necessary “for the Irish Government to make concessions in tax policy in return.”
Ireland’s economic woes grow by the day. Reports today state that the wind-down of Anglo-Irish Bank could cost anything from E35bn to E47bn which, in turn, has caused rating agencies to threaten to downgrade the country’s rating, which means Ireland will have to pay more interest on bonds it sells, thus increasing an already unmanageable debt.
And job creation remains a major problem for the Irish government. Unemployment is almost at 500,000 and Ireland lacks a pre-existing manufacturing base. And while the Irish government today unveiled a plan 300,000 new jobs (150,000 in manufacturing, tourism and internationally trade and 150,000 in ancillary industries) Ireland will continue to rely on multinationals to act as the key driver of economic growth. The low corporation tax – 12.5% – has always been its key attraction.
However, Ireland could also borrow from the E750bn EU-IMF Fund. If that is to happen, Langen and his colleagues say, Ireland must double its corporation tax.