Will a yes vote ,mean higher coporate tax.

311

If the lisbon treaty gets the go ahead ,does ireland lose it's appeal to coporate investments.
I'm not too well up on the buisness end of things ,but I get the impression that big companies from america won't come here ,if our taxes were raised because of the lisbon treaty ? Am I right in thinking this ?

sink

The short answer is no. Corporate tax is an indirect tax and indirect taxation is not a competence of the EU. In order for it to become a competence we would have to vote to change our constitution as it would affect our sovereignty. But if you really need to be convinced just take a look at all the business organisation backing the treaty. They have most to loose through higher taxes and they collectively represent the majority of business which employ the majority of workers in Ireland.

http://www.ibec.ie/ibecweb.nsf/wHome?OpenForm
http://www.sfa.ie/
http://www.amcham.ie/
http://www.yestolisbon.ie/index.php/business-alliance-for-europe

johnnyq

As a No voter, I personally haven't found direct evidence that Lisbon brings in higher corporate tax.

Now, there are proposals for a common corporation tax base (not in the treaty) but these cannot be brought in by majority voting. i.e. we still have a veto in this area.

Several people (e.g. shane ross) essentially believes that Brian Cowan won't use the veto. I guess due to the points made by the yes side (ff) that if we don't vote yes we'll be marginalised and he just extends the logic to the tax proposal which is strongly supported by France and to a lesser extent by Germany.

311

Thanks for replying ,I've just read some of the items within the links you gave and something comes to mind as I read them.

Is there any chance that our relations with europe are at risk ,if the commerce side of ireland doesn't show support for the treaty ? .I get the distinct impression of sympathy for the organisers of the treaty from various yes parties and I can't help thinking that this is not a reason to vote yes.

Edit : Thanks johnny Q ,also.

ircoha

from johnnyq's signature

Please VOTE NO!!!
Celebities Voting No: Gay Byrne, Eamon Dunphy, Ben Dunne, Vincent Browne,
David Norris, Shane Ross, Kevin Myers and Ulick McEvaddy amongst others...
Reasons to vote no

What treaty dropped the r and made 'bities of all of these?

Interesting that there is not a lady among them, all Alpha males.

sink

311 wrote: »

Thanks for replying ,I've just read some of the items within the links you gave and something comes to mind as I read them.

Is there any chance that our relations with europe are at risk ,if the commerce side of ireland doesn't show support for the treaty ? .I get the distinct impression of sympathy for the organisers of the treaty from various yes parties and I can't help thinking that this is not a reason to vote yes.

In my opinion no. We are not alone in our low tax status, most of the new memebers have low corporate tax some lower than us. Also there are other countries such as Britain and Denmark which are steadfast in their opposition to tax harmonisation. Some other countries might together form a common corporate tax rate, but it will be optional to join and 10 or more states are more than likely to stay out.

311

sink wrote: »

In my opinion no. We are not alone in our low tax status, most of the new memebers have low corporate tax some lower than us. Also there are other countries such as Britain and Denmark which are steadfast in their opposition to tax harmonisation. Some other countries might together form a common corporate tax rate, but it will be optional to join and 10 or more states are more than likely to stay out.

Thats made things clearer ,it's scary stuff when you don't know whats going on:eek:. Still have to vote though:)

johnnyq

ircoha wrote: »

from johnnyq's signature


What treaty dropped the r and made 'bities of all of these?

Interesting that there is not a lady among them, all Alpha males.

Thank you for the feedback ircoha, 'bities all sorted now;)

You made a good point about the lack of female celebrities. Most of them are in political/social organisations e.g. Greens, Neutrality Alliance, Women against Lisbon and so on.

But I did discover that Sinead O'Connor is against Lisbon as well so she is promptly added to the list as well as Tom McGurk (not sure is that a good thing though:D).

Hitman Actual

sink wrote: »

In my opinion no. We are not alone in our low tax status, most of the new memebers have low corporate tax some lower than us. Also there are other countries such as Britain and Denmark which are steadfast in their opposition to tax harmonisation. Some other countries might together form a common corporate tax rate, but it will be optional to join and 10 or more states are more than likely to stay out.

Out of curiosity, is this the Enhanced Co-Operation process? It's pretty much the last (main) detail of the treaty that I'm unsure of.

sink

lenny_leonard wrote: »

Out of curiosity, is this the Enhanced Co-Operation process? It's pretty much the last (main) detail of the treaty that I'm unsure of.

It is a process whereby 8 or more states can further co-operate on matters without everyone partaking. The referendum commission sums it up very well.

Referendum Commission wrote:

Enhanced Co-operation

Enhanced co-operation (sometimes called flexibility) is the term used for the procedure which allows a number of member states to use the institutions of the EU to promote closer co-operation among themselves.

In order to use these provisions, there are various conditions to be met. Among these conditions are:

* they do not apply to security and defence issues
* a minimum of 8 member states must be involved
* the aim must be to further the objectives of the EU
* the principles of the Treaties must be respected
* it should not affect the acquis communautaire (the body of decisions taken to date by the EU) or the rights and interests of other member states
* it must be used only as a last resort (it must be clear that the aim cannot be achieved within a reasonable time by using normal EU procedures).

If the Treaty of Lisbon is ratified, the number of member states require to be involved will be 9 and the exclusion of security and defence issues will be removed.

The procedure cannot be used in areas where the EU has exclusive competence. If it is being used in relation to common foreign and security policy it must be unanimously approved by the Council. In other areas, it must be backed by the Commission, approved by the Council (by QMV) and approved by the European Parliament.

Hitman Actual

Thanks for the clarification. The reason for my confusion was that Declan Ganly and Dermot Ahern faced off today on Newstalk at 1pm on the corporation tax issue, and Ganly's new position on this is that enhanced co-operation can be used as a 'back-door' for corpo tax. He was asked a direct question and gave a categorical "Yes it can" be used answer.

The thing is, if it confused me (a strong Yes supporter who thought he had all the issues sorted), what effect will it have on all the undecided's?

johnnyq

lenny_leonard wrote: »

Thanks for the clarification. The reason for my confusion was that Declan Ganly and Dermot Ahern faced off today on Newstalk at 1pm on the corporation tax issue, and Ganly's new position on this is that enhanced co-operation can be used as a 'back-door' for corpo tax. He was asked a direct question and gave a categorical "Yes it can" be used answer.

The thing is, if it confused me (a strong Yes supporter who thought he had all the issues sorted), what effect will it have on all the undecided's?

Well this whole area does create a lot of justifiable fear and tbh due to the complexities of the whole treaty it will probably take an ECJ judgement to clarify what we have exactly voted for.
I think it was the commission who have made plans about how to implement the treaty if passed and that might provide greater clarity, but they decided to repress it until after the vote. When things like this happen it's no wonder people are suspicious.

oscarBravo

lenny_leonard wrote: »

The thing is, if it confused me (a strong Yes supporter who thought he had all the issues sorted), what effect will it have on all the undecided's?

I reckon that's the point. It goes back to the question of agenda and responsibility that I raised a couple of days ago: Ganley can come out with something that's utterly untrue (or, at best, deeply misleading) at the last minute, taking advantage of the hiatus tomorrow so that nobody can publicly challenge him on it, sowing seeds of doubt.

If the treaty is rejected, and when it turns out that much of what he's been saying is simply untrue, he'll have quietly disappeared - he doesn't have to answer to the electorate.

oscarBravo

johnnyq wrote: »

Well this whole area does create a lot of justifiable fear and tbh due to the complexities of the whole treaty it will probably take an ECJ judgement to clarify what we have exactly voted for.

No, it won't, and repeating it over and over won't make it so.

Direct taxation is not an EU competence. The ECJ can't make it an EU competence. The treaty isn't as complicated as some would like to make out.

johnnyq

oscarBravo wrote: »

No, it won't, and repeating it over and over won't make it so.

Direct taxation is not an EU competence. The ECJ can't make it an EU competence. The treaty isn't as complicated as some would like to make out.

To separate Lisbon from the tax issue for a second, if direct tax is not an eu competence then why are there plans for the European Consolidated Corporation Tax Base, I mean surely that does show some link between the EU and corporation tax, but not necessarily a direct competency? If not, why is it even being mentioned?

oscarBravo

johnnyq wrote: »

To separate Lisbon from the tax issue for a second, if direct tax is not an eu competence then why are there plans for the European Consolidated Corporation Tax Base, I mean surely that does show some link between the EU and corporation tax, but not necessarily a direct competency?

Some of the member states think it's a good idea. Many don't. Those who do are trying to persuade the others that it's a good idea. It can't be imposed on us, which means it's not going to happen.

If not, why is it even being mentioned?

Because it muddies the waters nicely. Remember, just because it's factually incorrect, doesn't mean that certain parties aren't prepared to use it...

sink

johnnyq wrote: »

To separate Lisbon from the tax issue for a second, if direct tax is not an eu competence then why are there plans for the European Consolidated Corporation Tax Base, I mean surely that does show some link between the EU and corporation tax, but not necessarily a direct competency? If not, why is it even being mentioned?

The French are pushing for a cctb to become an EU competence, they have been doing so for almost 20 years apparently. In order for it to become a competence we must first hold a referendum on it. The French can push all they like, we and other countries will push harder back.

ixtlan

It's also worth mentioning that "enhanced co-operation" was brought in with Nice? in 2003, and has never been used.

Back then the no side envisioned the so-called "two-tier Europe" where all kinds of topics would be switched into enhanced co-operation dividing Europe in all directions. I remember at the time Patrica McKenna talking of the disaster that this would cause. However what happened was that the principal of consensus continued and no group was formed for anything.

Ix.

oscarBravo

That raises an interesting question for those forecasting catastrophe if Lisbon is ratified: can any of them point to a single negative prediction that was made prior to Nice, and show that it has come to pass?

johnnyq

sink wrote: »

The French are pushing for a cctb to become an EU competence, they have been doing so for almost 20 years apparently. In order for it to become a competence we must first hold a referendum on it. The French can push all they like, we and other countries will push harder back.

Thanks sink and OB.

I'm not trying to be obtuse here but I just did a quick search for EU Corporation tax base on their website and came across a working paper dated last year about this proposal, which sort of suggests it's more than pie in the sky, see here.

One quote from it sort of contradicts you...

link wrote:

A proposal for a CCCTB would take the form of a proposal for a Directive under Art.94 ECT, which requires unanimity in the Council.

No referendum there. It's this sort of thing that has people rightly confused.

oscarBravo

johnnyq wrote: »

One quote from it sort of contradicts you...

A proposal for a CCCTB would take the form of a proposal for a Directive under Art.94 ECT, which requires unanimity in the Council.

It's this sort of thing that has people rightly confused.

See the bit I've bolded? That's called a veto. It will never achieve unanimity in the Council, as long as Ireland and others are opposed.

ixtlan

On common corp tax rates...

oscarBravo wrote: »

It can't be imposed on us, which means it's not going to happen.

Absolutely, it cannot be imposed and there are several other countries who think the same way. I would add though a point I made a long time ago. There may come a time when we actually want a common tax rate. Possibly 5 or 10 or 15 years from now.

I find it somewhat amusing that even the groups on the far left are talking about low corp tax as a great thing. In actual fact it benefits the countries who get the investment and the multi-nationals who can play countries off against each other to pay the least tax. It is good for us to attract those companies but I would feel more comfortable for somebody somewhere in some public group or political party to just try to peek their heads over the parapet and say this is a double-edged sword. Sometimes you don't want to be letting corporations get away with paying less tax.

Lisbon leaves us with the decision, but it is something we may honestly change our minds about eventually, and ironically we may want to remove the veto in the future.

Ix

sink

oscarBravo wrote: »

See the bit I've bolded? That's called a veto. It will never achieve unanimity in the Council, as long as Ireland and others are opposed.

To add, the specific types of taxes that come under competency of the EU are listed somewhere in the current treaties. I don't know where exactly, Scofflaw dug them up once I'll have a look for them in a bit. The EU can not act upon direct taxation without amending the treaties, this will require Ireland to modify the constitution and hence will require a referendum. The Referendum commission missed this because it is not part of the Lisbon treaty.

311

At the moment in europe ,would a unified tax rate not benefit countries with a high natural resource production ,like cars etc. Them countries would then make more money from exporting "locally" within europe ?

Edit ,sorry if I was sidetracking :O

johnnyq

oscarBravo wrote: »

See the bit I've bolded? That's called a veto. It will never achieve unanimity in the Council, as long as Ireland and others are opposed.

C'mon OB, I never claimed otherwise and stated that in my first post in this thread.

Two subsequent issues arose
1) Was this proposal impossible because Direct Tax isn't a direct competance?
2) Would a referendum be needed?

This created confusion and now i've linked to a commission doc which sort of contradicts what i've been told. So who do I believe? This is my point about the confusion on this issue.

ixtlan

johnnyq wrote: »

Thanks sink and OB.

I'm not trying to be obtuse here but I just did a quick search for EU Corporation tax base on their website and came across a working paper dated last year about this proposal, which sort of suggests it's more than pie in the sky, see here.

One quote from it sort of contradicts you...


No referendum there. It's this sort of thing that has people rightly confused.

As OscarBravo say there is a veto.

Just to clear up the confusion on the referendum. That comes into play if there was a proposal to switch tax matters from unanimity to QMV.

If we choose not to use the veto and allow the EU to impose corp tax rates by QMV, the treaty would have been ammended and the likely result would be that as tax control had partially passed to the EU Ireland would have to hold a referendum. I say likely, as it would be up the the Irish supreme court, but it is indeed likely.

Just for the sake of devil's advocate... and I'm open to correction here... a common tax base could be agreed without a referendum, if the proposal were not to switch to QMV but were only to set a rate. We would have a veto but we could choose not to use it.

That doesn't sound as clear as I would like, but ultimately we are masters of our own fate, if we choose to use the veto.

Edit: I think I'm wrong here. It's a rather subtle semantic argument... If we vote to have a common tax base, then I guess that would mean the EU would determine the rate, even if by unanimity? So that might need a referendum?

Ix

johnnyq

ixtlan wrote: »

As OscarBravo say there is a veto.
Ix

Listen up everyone, I was the first person on this thread to say there was a veto, not OB!!!!!!. Read up post 3 if you don't believe me!!!

That's not my problem!!!!

I was told two things which are now likely to be false - numbered 1 & 2 in my previous post. It's important that we discuss whether they are false or not.

A referendum on the change from unanimity to QMV is grand, but what I was told was that a referendum is needed to make this whole proposal feasible (as a competence). From what I have linked to, this doesn't seem likely.

This confusion needs to be cleared up.

ixtlan

johnnyq wrote: »

Listen up everyone, I was the first person on this thread to say there was a veto, not OB!!!!!!. Read up post 3 if you don't believe me!!!

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.

johnnyq

ixtlan wrote: »

I am convinced that the Irish government can block any common rate if it chooses to do so.

A big reason that Business journalist and senator Shane Ross is worried about this corporation tax issue is that he doesn't think the government will use the veto and give essentially the same reasons for doing so as for voting yes i.e. otherwise Ireland becomes the pariahs of europe etc...

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!

This whole issue is not about rates, it's about power. The power to set those rates and decide what's taxed under them. That is why this issue doesn't go away, it is very uncertain where the power shift will lie in the future on this issue.

ixtlan

johnnyq wrote: »

A big reason that Business journalist and senator Shane Ross is worried about this corporation tax issue is that he doesn't think the government will use the veto and give essentially the same reasons for doing so as for voting yes i.e. otherwise Ireland becomes the pariahs of europe etc...

I've argued against Shane's Ross's view elsewhere. He could be right. What he suggests is not outside the realm of possibilities. We could be threatened into not using the veto.

However, from all the information I have, and from what people involved in EU negotiations say, this is not how the EU operates. There are too many viewpoints now for any easy threats.

If this is how he feels and he really believes this is what will happen the only solution will be to leave the EU. Lisbon will make no difference. I really don't understand how the presence of the tax veto can be improved upon. The only solution I could see was to put the actual tax rate in our constitution, which is ridiculous.

As regards tax, we have a veto. We may choose not to use it but that will ultimately be our choice.

Ix.

sink

Not to mention the fact that about a dozen other countries oppose tax harmonisation aswell.

Scofflaw

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

Scofflaw wrote: »

2. enhanced cooperation was introduced in the Nice Treaty. The only change made in Lisbon is that you only need 8 countries, not 9.

It's the other way around I thought.

Nice was 8, Lisbon is 9.

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

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