Looks like Merkel gave 2 fingers to Kenny!

TheInquisitor

http://www.bloomberg.com/news/2011-02-25/german-lawmakers-snub-irish-on-tax-say-similar-rates-must-come.html

German Lawmakers Snub Irish on Tax, Say Similar Rates Must Come
By Brian Parkin - Feb 25, 2011 11:58 AM GMT

German lawmakers said a plea by Irish opposition leader Enda Kenny to preserve his country’s corporate tax rate is unrealistic and unfair as Europe tries to pull together to staunch the sovereign debt crisis.

On the day of Ireland’s election, lawmakers from Chancellor Angela Merkel’s coalition snubbed Kenny’s claim in Berlin last week that Ireland’s 12.5 percent corporate levy is “non- negotiable.” Kenny’s call only highlights the unfairness of Europe’s uneven company tax rates, they said.

“Europe is struggling to find a formula for the debt crisis and tax dumping can’t be part of the plan,” Hans Michelbach, a Christian Social Union lawmaker from parliament’s Finance Committee, said in an interview. “Ireland wants it both ways: distortive corporate tax rates and trade bloc aid.”

While polls show Kenny’s Fine Gael party may win today’s election, any pledge to maintain the national tax rate may run up against a drive by Germany and France to link harmonized tax to a package of tools to help the euro. Merkel in comments this week said the Irish levy led to “misallocations” that helped cause the country’s banking crisis.

EU states should be permitted to set their own tax rates within a “certain” corridor, Merkel said in a Feb. 23 speech.

Ireland’s low company tax has attracted investment from companies including New York-based Citigroup Inc. and Microsoft Corp., the world’s largest software maker. They fueled an export-driven economic boom that turned to bust when the property market collapsed in 2008, pushing banks to the brink of collapse.
Can’t Sustain Tax

French President Nicolas Sarkozy said in January that Ireland can’t sustain a tax rate that’s half the European-Union average after it sought an 85 billion-euro ($117 billion) lifeline last year. Germany is the biggest contributor to the European Financial Stability Facility that is helping Ireland stay solvent.

Managing the crisis offers a chance to revive the prospects for Germany’s decade-old push for the EU to adopt uniform corporate tax rates, said Free Democrat lawmaker Daniel Volk, a tax expert who is a member the Berlin parliament’s Finance Committee.

“Put it this way: if all the EU states but Ireland agree to a degree of harmonization then Ireland would be ill-advised to try to block it,” Volk said in an interview today.
EU Tax Core

Germany’s plan to push tax harmonization got a boost from EU Tax Commissioner Algirdas Semeta, cited in the Handelsblatt newspaper on Feb. 14. Semeta said a core of EU states should start efforts to bring the company tax rates closer if not all 27 member states were prepared to join talks.

Corporate tax in the EU averages 23 percent, according to the bloc’s data. In France the rate is 34 percent, while Germany applies a corporate tax of 15 percent on top of a local commercial tax at the same rate.

Merkel’s proposal for a corridor of corporate tax in the EU has coalition support, said Michael Meister, the top finance spokesman in parliament for her ruling Christian Democrats.

“I imagine there’ll be an appropriate transition period for adopting such a solution,” Meister said in an interview today. “There’s no time like the present to move forward.”

Pete_Cavan

Ireland’s low company tax has attracted investment from companies including New York-based Citigroup Inc. and Microsoft Corp., the world’s largest software maker. They fueled an export-driven economic boom that turned to bust when the property market collapsed in 2008, pushing banks to the brink of collapse.

Eh, no... Cheap credit offered to Irish banks from European banks fueled a property lead economic boom that turned to bust when the property market collapsed in 2008, pushing both Irish and European banks to the brink of collapse. Low interest rates to suit France and Germany amplified the problems associated our idiotic government policy of pursuing an economy based on construction, nothing to do with corpo tax.

Our low corporation tax fueled an export-driven economic boom which is sustaining the country at present and without which we would be in a even worse situation than we currently are in and European countries would have to contribute more to us.

John_Mc

I sincerely hope that if the people I voted get into power, they have the intelligence to identify that a harmonisation of corporate tax rates in the EU zone would be our death sentence. They'll also need to have the balls and integrity to deal with the pressure that will be exerted on them by France & Germany. The outgoing shower certainly wouldn't have.

It would be better to leave the EU than conform with what they want. It's so frustrating to see them do this after agreeing to allowing us a Veto on this specific issue in Lisbon #2 so that we would say yes :mad:

Sleepy

Interesting phraseology: "a plea"

It is not in Angela Merkel's power to modify Ireland's corporation tax rate. She can attempt to use this in any negotiations with us but she can't force it on us (as the result of the EU walking away from the negotiations without an agreement will be similarly cataclysmic as it would be to us).

Raising the corp tax rate would do the Irish economy incomprehensible damage whereas all it gets for Angela (or her ilk) is an idealogical win. Germany aren't our competitors for the FDI we attract, neither are France or any of the other European powers who want to see harmonised corporation taxes so they won't lose or gain from us having a higher rate.

The issue of interest rates / bank bail outs is almost one of Mutually Assured Destruction if we refuse to work together. Ignore the sound bites about the corp tax.

munchkin_utd

Pete_Cavan wrote: »

Our low corporation tax fueled an export-driven economic boom which is sustaining the country at present and without which we would be in a even worse situation than we currently are in and European countries would have to contribute more to us.

True
BUT

the real problem is not with Intel manufacturing and selling their stuff from Ireland as a base.
Nor realy google or other employers who have a substantial base in Ireland.

Its the front companies and subsiduaries of german / french major corporations who have an office and a dozen staff in the IFSC and then proceed to channel 100s of billions of sales and transactions through the office.
Sales to germans, in germany, by a german company BUT the paper trail is diverted through Ireland, costing the german taxpayer billions (and gaining the irish taxpayer a few euro in the process for doing very little, and employing very few).

Every arguement has many many sides. In Ireland we focus EXCLUSIVELY on the googles and intel.
This is completely NOT what the germans have a problem with.**

(**according to an interview from the chief trouble stirring german MEP whose name i cant quite remember at the moment!)