Will a yes vote ,mean higher coporate tax.

ixtlan wrote: »

Apologies... I was just quoting the last comment!

On the referendum, I await more knowledgeable heads than myself. I am convinced that the Irish government can block any common rate if it chooses to do so.

Whether a referendum is required if it was agreeable to a common rate is perhaps a minor point for me anyhow. The Irish government is always entitled to change rates on it's own anyhow. I don't think we should have referendums on rate changes. Imagine if we had to vote on whether income tax or corp tax should increase!

Ix.

Actually, some of the confusion results from thinking about tax as all one thing.

1. the EU has competence on indirect taxation (VAT, customs duties) because it is a customs union - however, EU competence on taxation is a veto area

2. the EU has no competence on direct taxation (income tax, corporation tax) - to give it competence would require another treaty and another referendum

In other words, the EU is entitled to rule on the taxation of things, because it is a customs union and a common market regulator. However, it is not entitled to tax people or companies, because they are legally subject to the member states and not the Union.

3. as a common market and customs regulator, the EU is entitled to put forward proposals on how cross-border taxation can be distributed fairly between countries, because that is part of internal market harmonisation. CCCTB is a system for calculating where taxes should be paid

4. but, because taxation, insofar as it is an EU competence, is a veto area, it can only get such a proposal accepted by unanimity

5. at no point can it set the actual rates of corporate tax, because it does not have the competence to do so.

So much for the general argument that the EU can change our corporate tax rates directly. It can't, because it does not have the competence to do so, is not given it in Lisbon, and is unlikely ever to be given it.

On to the more sophisticated argument that a group of countries could sidestep the veto requirement by using what is called the "enhanced cooperation" mechanism.

1. "enhanced cooperation" allows a group of countries to go ahead with a system like CCCTB. They need (currently) 8 states to form such a group, and the formation of such a group must be accepted unanimously by all the states before it can be formed

2. enhanced cooperation was introduced in the Nice Treaty. The only change made in Lisbon is that you only need 8 countries, not 9 [EDIT]actually the other way round - Lisbon raises it from 8 to 9[/EDIT].

The suggestion has been made that a group of countries could form such a group for CCCTB, and that by the existence of such a group, Ireland would be forced to adopt CCCTB.

The last bit of the argument there is pretty hazy, I'm afraid, because no-one has really suggested how it would actually happen, other than saying that the existence of such a group would put pressure on us, perhaps by forcing Irish-based companies to use CCCTB if they were exporting to other countries.

However, there is first the little matter of the unanimity requirement to allow such a group to form in the first place. Ireland can veto the formation of the group.

Further, there is the issue that enhanced cooperation groups are only allowed to operate as long as what is being adopted by the group does not impact those who choose not to join. If a group of countries does choose to go ahead with a "CCCTB group", they must operate CCCTB in such a way as not to impact Ireland. Irish-based companies cannot be "forced to use CCCTB".

Finally, and most relevantly to discussion of Lisbon, enhanced cooperation already exists. It's not new in Lisbon.

That is why groups like the Irish Taxation Institute and the Irish Association of Chartered Accountants have said that Lisbon doesn't impact Ireland's corporation tax regime - and also why multinationals have been happy to support a Yes vote.

cordially,
Scofflaw

IRLConor wrote: »

It's the other way around I thought.

Nice was 8, Lisbon is 9.

(Other than that, it was an excellent explanation.)

You're quite correct - Lisbon raises the bar rather than lowers it.

standing corrected,
Scofflaw