Irish Policy Makers Resist Tax Harmonization

Tax-news.com reports on the growing concern in Ireland about European Union plans to harmonize the definition of taxable income for corporations. Such a scheme, particularly if it is voluntary, is not automatically objectionable. But Irish lawmakers correctly fear that a common tax base is merely the first step on the path to harmonized (and higher) tax rates:

European Union Taxation Commissioner Laszlo Kovacs has reportedly told Irish business leaders that formal plans for a common EU corporate tax base will be unveiled by the European Commission next week. …despite Kovacs’s assurances that the system would be optional for businesses, many member states, including Ireland, are strongly opposed to the CCCTB plans, wary that it would be the first step towards the harmonisation of corporate tax rates across the EU, an idea favoured by France and Germany. If this was the case, Ireland would certainly have a lot to lose, as its 12.5% corporate tax rate has been cited as a major ingredient in Ireland’s economic revival in recent years, and investors certainly would not welcome European interference with Ireland’s corporate tax regime. Consequently, organisations such as IBEC, and Irish politicians, have been lobbying in opposition of CCCTB. …Irish MEP Eoin Ryan…told MEPs that he “cannot and will not accept” moves towards a common corporate tax base. “Tax competition is healthy for the economic development of the European Union. It provides a clear incentive to European Governments to manage their public finances carefully and to build a corporate tax regime that encourages enterprise,” he stated. “The bottom line here is that no one size fits all policy covering corporate taxation matters in Europe is going to succeed. It is neither sensible nor realistic to seek convergence of corporate tax rates across Europe. EU member states have different demographic and social priorities. EU member states need to use their corporate taxation policies in different ways so as to entice foreign direct investment into their countries and generate employment.”