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France U-turns on Corporate Tax Rate

Posted on: June 25th, 2008

I welcomed last week’s report in the Financial Times that  French Finance Minister, Christine Lagarde has  dropped any immediate French threats to Ireland’s 12.5% corporate tax rate.

Speaking in the Seanad last week, I said that the government should take comfort and hope from the u-turn in France’s attitude less than a week after the referendum result.

The European Union has woken up to Ireland and it is about time. Confirmation of this comes with the encouraging and authoritative report in today’s Financial Times under the headline “Tax harmonisation on ice after Irish poll”. The crux of the piece is that the French Presidency, in a direct response to the referendum result, has already postponed the issue of tax harmonisation. This is in itself a great achievement by the people of Ireland as a consequence of their decision to reject the Lisbon treaty. It will be difficult for the Government to champion that achievement in Brussels today because it was not in favour of a “No” vote.  However, there is undoubtedly cause and effect at play here. If the “No” vote has achieved that, we are already going places.  We have achieved something of vital national interest in response to that “No” vote and we are getting respect in Europe.

It is too early for the Taoiseach to push hard on this but there is undoubtedly an opportunity to capitalise on that response. The French Finance Minister has said tax harmonisation is not completely off the agenda but that France will no longer push it.  Last week she said it was top of the agenda. It is important that we do not simply accept its postponement. That is only a start. We must recognise that we are punching hard as a consequence of our rejection of the treaty, that we are being taken seriously and that we are achieving something. We may ultimately achieve the protection of Ireland‘s vital national interest. That interest cannot be protected by the veto, but I will not go into that.

I ask that we respond to this by way of a resolution, agreed by Members on all sides, urging that the issue of tax harmonisation be not merely postponed but buried via the next referendum which we undoubtedly will have. The news today is encouraging because it shows that our rejection of the Lisbon treaty has already achieved recognition in a solid way from the French Presidency.