Republic of Ireland to get 'EU loan rate reduction'

schween

Ireland will get an interest rate cut, potentially saving €400 million.

Is that €400m per year or over the period of the loans?

http://www.bbc.co.uk/news/business-13321551

http://www.breakingnews.ie/ireland/report-euimf-to-reduce-bailout-interest-rate-504179.html

Amhran Nua

No word on concessions if any either.

skelliser

400m per year.

Still just a drop in the ocean and a slick diversionary tactic.

The debt is still simply unworkable.

The elites in europe have just kicked the can further down the road.

schween

There is such a song and dance being made about this rate cut. I suppose we have to save wherever we can and €400m is better off in our pockets than theirs.

macannrb

this is a complete red herring. Probably the only election promise that the government knew was realistic.

that the rate cut in context of Morgan Kellys article.

The EU would probably get more money out of us, if they reduced the rate to zero, and made the term 50 years.

Its like giving a heroine addict a lolly to try to get him to quit his addition

MetalDog

macannrb wrote: »

Its like giving a heroine addict a lolly to try to get him to quit his addition

Its like saying they're only going to chop off both your arms below the elbow instead of above it. Either way, you'll still bleed to death.

motherriley

It's about the same as the UK is borrowing a day.:rolleyes:

http://www.debt-clock.org/

Nolanger

Another 40,000 on the dole would wipe that out in 12 months!

irishh_bob

macannrb wrote: »

this is a complete red herring. Probably the only election promise that the government knew was realistic.

that the rate cut in context of Morgan Kellys article.

The EU would probably get more money out of us, if they reduced the rate to zero, and made the term 50 years.

Its like giving a heroine addict a lolly to try to get him to quit his addition

would still be a good deal for germany , france and the uk , we are essentially paying the losses of thier reckless banks , the way this thing is been spun by the big guns in europe is utterly dishonest , its us who is bailing them out , lennehan didnt make the worst descision in the history of the state on sept 30th 2008 off his own bat , he was under serious pressure from europe not to let the irish banks ( european banks ) collapse

skelliser

irishh_bob wrote: »

would still be a good deal for germany , france and the uk , we are essentially paying the losses of thier reckless banks

and come 2013 all the bondholders will have been paid, German and French banks will be well capitalised to brace themselves for irelands default.

Everyone wins except us!

PeterIanStaker

The default is inevitable at this stage, watch them spin the daylights out of this so called reduction and tout it as the best thing since sliced pan.

Nody

irishh_bob wrote: »

would still be a good deal for germany , france and the uk , we are essentially paying the losses of thier reckless banks , the way this thing is been spun by the big guns in europe is utterly dishonest , its us who is bailing them out , lennehan didnt make the worst descision in the history of the state on sept 30th 2008 off his own bat , he was under serious pressure from europe not to let the irish banks ( european banks ) collapse

You are of course aware that the countries that had by far the most money in Irish bank (and has since then also removed the greatest amount of cash) was from UK and US right?

Scofflaw

Nody wrote: »

You are of course aware that the countries that had by far the most money in Irish bank (and has since then also removed the greatest amount of cash) was from UK and US right?

Unfortunately, the idea that the money was all from eurozone banks seems to persist despite the complete lack of evidence, and indeed in the teeth of evidence pointing the other way. Presumably it's a psychological defence against having to feel grateful for being bailed out.

On the OP, I seem to recall that the objection to the EU/IMF bailout was essentially that the rate was too high - although it was a good deal lower than the markets have been prepared to offer for quite some time. Now that the rest of Europe may be about to absorb even more of our default risk by giving us rates we haven't seen for several years, will they earn any kudos? I doubt it - the problem is that they're lending us the money to do what the previous government trapped us into, so from our point of view they're an enabler of bad policy. Of course, from their point of view, we're borrowing their money to pay back our US and UK creditors - the eurozone taking on the risks of reckless lending in London and New York. No wonder the US Treasury Secretary nixed the idea of Ireland burning the bondholders.

cordially,
Scofflaw

Coyler

Not that I don't believe you lads but do you have some links to back that up. The claim that the US prevented bond holder haircuts in that light would be interesting, to say the least.

irishh_bob

skelliser wrote: »

and come 2013 all the bondholders will have been paid, German and French banks will be well capitalised to brace themselves for irelands default.

Everyone wins except us!

its all so obvious , they will cut us loose as soon as they are in the clear for thier own banks

paddy0090

Nody wrote: »

You are of course aware that the countries that had by far the most money in Irish bank (and has since then also removed the greatest amount of cash) was from UK and US right?

I haven't the link(I'm locked out of old articles) but I read on The Economist website that it's predominantly German French and English Banks that hold the debt of peripheral countries, Irleand included. Also the Historian Niall Fergusson went through this in Newsweek.

Even if the holders of the debt are changed we'll still probably default in some fashion. Our ability to repay it, is based on faulty growth predictions. All heavily contingent on spending money that's been borrowed in a more efficient manner. I don't think they expect us to repay as Morgan Kelly pointed out, they're just trying to protect themselves.

Does anyone else think it's strange that Portugal is predicting 2 years of contraction with it's bailout and Greece is looking down the same barrel with it's continued austerity, but our economy is supposed to grow?

I don't think this matters at all. It won't change what needs to be done. Cuts will continue less 400m. Yippee!!!!

Scofflaw

paddy0090 wrote: »

I haven't the link(I'm locked out of old articles) but I read on The Economist website that it's predominantly German French and English Banks that hold the debt of peripheral countries, Irleand included. Also the Historian Niall Fergusson went through this in Newsweek.

Unfortunately, all of them used the Basel BIS figures, which are basically irrelevant.

paddy0090 wrote: »

Even if the holders of the debt are changed we'll still probably default in some fashion. Our ability to repay it, is based on faulty growth predictions. All heavily contingent on spending money that's been borrowed in a more efficient manner. I don't think they expect us to repay as Morgan Kelly pointed out, they're just trying to protect themselves.

Does anyone else think it's strange that Portugal is predicting 2 years of contraction with it's bailout and Greece is looking down the same barrel with it's continued austerity, but our economy is supposed to grow?

I don't think this matters at all. It won't change what needs to be done. Cuts will continue less 400m. Yippee!!!!

It's relevant, though, because there's a lot of this kind of thing:

its all so obvious , they will cut us loose as soon as they are in the clear for thier own banks

which is necessarily predicated on the idea that the only reason we're currently being bailed out is to get the eurozone banks paid back, and when they have been, then we'll be "thrown to the wolves". If there's no evidence that the eurozone banks neither have particularly big holdings in Irish bank debt nor have had them paid back - and that's what the evidence says is the case - then that story becomes rather obviously an evidence-free zone.

Coyler wrote:

Not that I don't believe you lads but do you have some links to back that up. The claim that the US prevented bond holder haircuts in that light would be interesting, to say the least.

That's from Morgan Kelly's article - I don't know whether he has backed up the claim, but the general feeling is that the IT's lawyers wouldn't have passed the story if he couldn't.

cordially,
Scofflaw

paddy0090

which is necessarily predicated on the idea that the only reason we're currently being bailed out is to get the eurozone banks paid back, and when they have been, then we'll be "thrown to the wolves". If there's no evidence that the eurozone banks neither have particularly big holdings in Irish bank debt nor have had them paid back - and that's what the evidence says is the case - then that story becomes rather obviously an evidence-free zone.

What evidence?

The article I referred to may well have been wrong as you said (tbf TE is generally reliable), but where then did the money come from? This is the first I've heard of US banks being our creditors. The UK generally seems to come in 3rd place in the list of creditors to peripheral countries though it would make sense that they be one of our biggest, if not thee biggest.

Another article I read referred to Hypo Real Estate being owed 10bn by our governement.

I still don't think .4bn less of cuts will make a big enough difference

Scofflaw

paddy0090 wrote: »

What evidence?

The article I referred to may well have been wrong as you said (tbf TE is generally reliable), but where then did the money come from? This is the first I've heard of US banks being our creditors. The UK generally seems to come in 3rd place in the list of creditors to peripheral countries though it would make sense that they be one of our biggest, if not thee biggest.

Another article I read referred to Hypo Real Estate being owed 10bn by our governement.

Hm. The "evidence" usually offered in support of the idea that the major owners of Irish bank debt were/are eurozone banks is the Basel Bank of International Settlements inter-country data that shows which what's owed by banks in different countries to each other. Unfortunately, that data is almost completely irrelevant to the 6 covered banks, because the data covers 83 banks in Ireland, the majority of which are (a) subsidiaries of eurozone banks (whose money is recorded as "owed" to their parent banks), and (b) nothing at all to do with the Irish economy, because the business they do here is lending outside Ireland. The data, in other words, reflects the operations of the IFSC as an offshore banking hub, not the operation of the Irish economy.

The data available from the Central Bank on who holds the debt securities issued by the covered banks - that is, the ones we're bailing out - on the other hand, shows that eurozone holdings of covered bank debt are minimal, and have barely decreased (c. €10bn out of the current €78bn in debt securities, and in the runup to the Guarantee about €14.3bn out of c. €114bn). What that data shows is that the major counter-parties, and the main people paid off during the Guarantee, were "rest of world" - about €72.8bn of the €114bn in the months before the Guarantee, and about €17bn now.

There are three geographical regions in the CB's figures for counterparties to covered bank debt - Ireland, eurozone, and "rest of world". That "rest of world", financially speaking, is likely to be dominated by London and New York - and indeed, that's where the Irish banks had subsidiaries, operations, and debt raising histories, not in the eurozone.

I still don't think .4bn less of cuts will make a big enough difference

It's not that big a difference, but that illustrates the fact that it's not about the interest rate, really - it's more about the disastrous choice made by Lenihan in September 2008. Still, it helps - and when you consider they're lending to a country whose media is actively calling for default, and in order to allow us to pay off creditors in the US and UK whose debts our government guaranteed, it's somewhat more than could be rationally expected.

cordially,
Scofflaw

Amhran Nua

paddy0090 wrote: »

Cuts will continue less 400m. Yippee!!!!

Apparently not, the story is being denied by both the Germans and Irish politicians.

Yet again, our government's management and assessment of the situation is proving to be critically short sighted.

Ireland is being let go to the wall so that Europe's banking institutions and finance systems can remain afloat. Our debt is derived from their risk and their mismanagement as well as our own, but we are taking all of the hit for everybody, so that they don't have to take any of it. One might say they are punishing us for our unilateral approach to the disastrous bank guarantee of '08, but that's neither here nor there. What matters is that they have made a conscious decision to save themselves at our expense, and we are playing along, like fools.

We have a huge opportunity to play hardball with Europe right now, which will not last. Europe's banking system is currently nursing itself back to health at our expense, and all our politicians seem to want to do is buddy up with self-serving EU leaders and play nice so we can tread water and keep ourselves afloat day to day. We should be using this opportunity, in as mercenary a fashion as they would, to threaten dealing them a fatal blow while they are weak.

We are in too deep, with no possibility of saving ourselves without help. At the moment, europe is tied to us, but they are swimming confidently towards the shore, while we are slowly sinking. If we act now, we have a chance of survival.

We should stop this policy of soft diplomacy. If there was ever a time to sacrifice political friendships and goodwill in the national interest, it is now. Ireland (certainly Ireland as a republic) has never been in such peril. Should the current chain of events continue, we will see decimation of our economy, disappearance of our foreign investment base, and poverty and emigration on a scale not seen since the famine. We should tell the EU in no uncertain terms, "If we go down, then we will drag you down with us. We will not and can not pay for your irresponsible risks as well as our own. Pay your share or we're all going under".

Watch how much more than the inconsequential €400 million bone which we just received they throw us then.

As things stand, we are going under slowly. Pure and simple. We are living way beyond our means, with no political will to take the tough decisions and a deepening financial black hole which we STILL have not seen the end of. Our greatest asset at the moment is that the fates of France and Germany, and the fate of the single currency are tied up in our situation, but they won't be for long. Why are we so afraid as a nation to use our trump card and FORCE them to rescue us in the interest of their own self preservation while we still can???

Europe-wide socialisation of European losses is the only hope for Ireland's economic survival. We MUST push for it now, with all our political might, before any leverage we have disappears under the strength of a European banking recovery.

paddy0090

If we go down, then we will drag you down with us.

I'm not so sure about this. The Germans and French seem pretty cocky about dragging a concession out of us on Corporation tax.

The only risk we pose to them is as a contagion. We're really just a decimal point on the EUs balance sheet and they can still socialise the losses if we do default. And if we do default where does that leave us?

Now if Spain were to go down this road......that's like trying to lift an elephant out of sewerage tank with nothing but a smile. Spain seems a bit removed from danger at the moment though. I have my suspicions about Spain. Big bubble yet little in the way of losses????? It's easier to hide losses in a big country with lots of banks and lots of regional governments than a small country with only 6 banks and one government

Scofflaw

Deleted User wrote: »

Yet again, our government's management and assessment of the situation is proving to be critically short sighted.

Ireland is being let go to the wall so that Europe's banking institutions and finance systems can remain afloat. Our debt is derived from their risk and their mismanagement as well as our own, but we are taking all of the hit for everybody, so that they don't have to take any of it. One might say they are punishing us for our unilateral approach to the disastrous bank guarantee of '08, but that's neither here nor there. What matters is that they have made a conscious decision to save themselves at our expense, and we are playing along, like fools.

We have a huge opportunity to play hardball with Europe right now, which will not last. Europe's banking system is currently nursing itself back to health at our expense, and all our politicians seem to want to do is buddy up with self-serving EU leaders and play nice so we can tread water and keep ourselves afloat day to day. We should be using this opportunity, in as mercenary a fashion as they would, to threaten dealing them a fatal blow while they are weak.

We are in too deep, with no possibility of saving ourselves without help. At the moment, europe is tied to us, but they are swimming confidently towards the shore, while we are slowly sinking. If we act now, we have a chance of survival.

We should stop this policy of soft diplomacy. If there was ever a time to sacrifice political friendships and goodwill in the national interest, it is now. Ireland (certainly Ireland as a republic) has never been in such peril. Should the current chain of events continue, we will see decimation of our economy, disappearance of our foreign investment base, and poverty and emigration on a scale not seen since the famine. We should tell the EU in no uncertain terms, "If we go down, then we will drag you down with us. We will not and can not pay for your irresponsible risks as well as our own. Pay your share or we're all going under".

Watch how much more than the inconsequential €400 million bone which we just received they throw us then.

As things stand, we are going under slowly. Pure and simple. We are living way beyond our means, with no political will to take the tough decisions and a deepening financial black hole which we STILL have not seen the end of. Our greatest asset at the moment is that the fates of France and Germany, and the fate of the single currency are tied up in our situation, but they won't be for long. Why are we so afraid as a nation to use our trump card and FORCE them to rescue us in the interest of their own self preservation while we still can???

Europe-wide socialisation of European losses is the only hope for Ireland's economic survival. We MUST push for it now, with all our political might, before any leverage we have disappears under the strength of a European banking recovery.

In fact, we're borrowing European money to pay off the US and UK banks our banks recklessly borrowed from. Refusing to pay Europe back after spending their money paying off US and UK banks would be the icing on what is already a highly unpopular cake.

cordially,
Scofflaw

paddy0090

Its's back on...but at what cost

From Oli Rehn

ON IRELAND'S INTEREST RATES
"In my view, for good reasons, the focus of the interest rate should be less related to so-called moral hazard, and essentially related to debt sustainability. The moral hazard problem is tackled by rigorous conditionality of the programme and I don't see that any leader of an EU member state would voluntarily want to be in an EU/IMF programme.
"Meanwhile, it is important that in defining the interet rate, debt sustianability is firmly taken into account and therefore the COmmission has already some time ago proposed that we would have a reduction of the interet rate for Ireland, in order to help Ireland overcome its debt burden, in the same way as Greece, or now Portugal, and I would expect that this kind of an agreement could be taken shortly.
"This is of course again a matter for the EU member states to decide."

Scofflaw

paddy0090 wrote: »

Its's back on...but at what cost

From Oli Rehn

The Commission has pretty much been making the case for an interest rate reduction from the start - it's a multilateral matter, though, so anyone can block it.

cordially,
Scofflaw

paddy0090

paddy0090 wrote: »

The only risk we pose to them is as a contagion. We're really just a decimal point on the EUs balance sheet

I don't know about that. I would imagine that the overall cost to the european project of it's former "golden boy" economy completely imploding and dragging down the value and reputation of the single currency on the international markets would be far more costly than the shillings and pence (figuratively speaking) that we actually owe them.

There's huge reputational and confidence implications here too, in terms of long term damage to the value of the €, not just the actual figures involved. I can't help thinking that our politicians should be trying to make more out of that than they are at present.

paddy0090 wrote: »

I have my suspicions about Spain. Big bubble yet little in the way of losses????? It's easier to hide losses in a big country with lots of banks and lots of regional governments than a small country with only 6 banks and one government

Scary. Now that WOULD be a disaster for the single currency...:eek:

RichardAnd

Doesn't seem worth a new thread but a theory of mine has just gained more weight.


http://www.rte.ie/news/2011/0511/economy1.html


For those without the time to read the article, it basically outlines that Irish interest is taking a back seat to Greek issues right now. It further goes on to state, no surprise, that the French seem adament that Ireland will not get a reduction until our corporation tax rate is raised.

This was something I raised before and I really don't see it going away. It's like the CT rate has become a l lynch pin in this whole debate.

Scofflaw

RichardAnd wrote: »

Doesn't seem worth a new thread but a theory of mine has just gained more weight.


http://www.rte.ie/news/2011/0511/economy1.html


For those without the time to read the article, it basically outlines that Irish interest is taking a back seat to Greek issues right now. It further goes on to state, no surprise, that the French seem adament that Ireland will not get a reduction until our corporation tax rate is raised.

This was something I raised before and I really don't see it going away. It's like the CT rate has become a l lynch pin in this whole debate.

Interesting, not least (in my view) for the final comments by Lucinda:

However, she said it would take 'a lot more work and a lot more convincing, and while that may seem difficult to understand at home, they're coming from an entirely different position in France and other countries'

Imagine! France and other countries coming from a different position to Ireland, and that fact being acknowledged by an Irish Minister! Clearly she's a traitress.

amused,
Scofflaw

hinault

Our politicians need to work on the art of diplomacy

On a serious note, the fact that every assurance given by the last government to Europe proved to be inaccurate, convincing our European partners is going to be an uphill task for the near future.

paddy0090

RichardAnd wrote: »

This was something I raised before and I really don't see it going away. It's like the CT rate has become a l lynch pin in this whole debate.

I read from the Charlemagne Blog in the Economist that Kenny missed a trick on the issue of the CT and the CCCTB at his first EU summit. Apparently it was requested that Ireland simply agree to 'engage' on the issues and in turn it would get the reduction. After that we could in theory have stonewalled them.

The CT is become something of a red herring. How much is it actually worth to us or them - excl. the CCCTB which would directly contribute to there tax revenues.

It's projected to come at 4.020bn(here) making a 1% increase worth roughly 321m(4.020/12.5) and a 5% increase over 1.6bn assuming we don't loose all the multinationals and the brass plate army. Coupled with the 400m a year in reduced interest payments thats 2bn.

Our position is, if we move on this now we can be moved on it in the future and despite it being low it brings in more revenue than it would if it were higher. Also it's the principal means of a small periperal economy to attract multinational investment. Ergo we shouldn't move on it.

There position is it's tax dumping or what we call tax competition. As Shires and WPP showed they're not entirely wrong. But the French have no problem in tax competition conducted on "come into my web basis". Not sure about the Germans.

On top of the tax there's the additional income tax and VAT revenues that the FDI generates so it's an awful lot to gamble for a guaranteed 400m. Hard to see where the numbers will go as a result of the further 10bn cuts which makes it harder to justify taking the risk.

As regards the CCCTB I'm completely opposed to this. The larger party, being better developed and with greater access to capital, is generally the larger benifactor in any mercantile agreement(according to the WSJ). I think we're entitled to some tax windfall from any business based here that trades successfully in Europe. They've enjoyed the same for years.

The CCCTB could become the price of any future solution such as debt forgiveness, in which case do we take it?

Scofflaw

As regards the CCCTB I'm completely opposed to this. The larger party, being better developed and with greater access to capital, is generally the larger benifactor in any mercantile agreement(according to the WSJ). I think we're entitled to some tax windfall from any business based here that trades successfully in Europe. They've enjoyed the same for years.

The CCCTB could become the price of any future solution such as debt forgiveness, in which case do we take it?

What do you base your 'complete opposition' on, out of interest? I'm not pro-CCCTB (I'm not sure it will work, and it may or may not deliver the promised savings), but I've yet to have the strong opposition to it decently explained to me.

cordially,
Scofflaw

paddy0090

Scofflaw wrote: »

What do you base your 'complete opposition' on, out of interest? I'm not pro-CCCTB (I'm not sure it will work, and it may or may not deliver the promised savings), but I've yet to have the strong opposition to it decently explained to me.

cordially,
Scofflaw

I'm familiar with this argument, I think it was made in the IT, but that's not why I'm opposed to it. It may or may not deliver savings in the short term but in the medium to long term I think it will result in businesses paying higher rates of taxes across the EZ. If politicians spent money wisely this wouldn't necessarily be a bad thing.

I think it will eliminate the downward pressure on corporate taxes particularly in smaller countries where their ability to attract FDI will be dramatically reduced. Legally these must be applied to all businesses at the same rates with the caveat that you can avail of tax breaks(as in France). Higher rates will hurt all businesses, but it will be far worse if governments start interfering to pick winners. Tax competition is generally a good thing.

It is hugely beneficial to the larger markets in the EU who already operate from a a position of strength (more capital, more labour, more entrepeneurs). The tax reciepts of smaller countries wouldn't benefit as much from increased trade where as a large countries would.

beeftotheheels

paddy0090 wrote: »

I'm familiar with this argument, I think it was made in the IT, but that's not why I'm opposed to it. It may or may not deliver savings in the short term but in the medium to long term I think it will result in businesses paying higher rates of taxes across the EZ. If politicians spent money wisely this wouldn't necessarily be a bad thing.

I think it will eliminate the downward pressure on corporate taxes particularly in smaller countries where their ability to attract FDI will be dramatically reduced. Legally these must be applied to all businesses at the same rates with the caveat that you can avail of tax breaks(as in France). Higher rates will hurt all businesses, but it will be far worse if governments start interfering to pick winners. Tax competition is generally a good thing.

It is hugely beneficial to the larger markets in the EU who already operate from a a position of strength (more capital, more labour, more entrepeneurs). The tax reciepts of smaller countries wouldn't benefit as much from increased trade where as a large countries would.

This argument is premised on a compulsory CCCTB applicable to MNCs and that is not what the current proposal is for. The current proposal is for an optional CCCTB aimed at SMEs and the Commission has come out against making it compulsory based on subsidiarity issues.

If a CCCTB was going to reduce the tax base for a business in a "competitive" state while increasing the tax base in high tax state then no business would opt into it.

Scofflaw

paddy0090 wrote: »

I'm familiar with this argument, I think it was made in the IT, but that's not why I'm opposed to it. It may or may not deliver savings in the short term but in the medium to long term I think it will result in businesses paying higher rates of taxes across the EZ. If politicians spent money wisely this wouldn't necessarily be a bad thing.

I think it will eliminate the downward pressure on corporate taxes particularly in smaller countries where their ability to attract FDI will be dramatically reduced. Legally these must be applied to all businesses at the same rates with the caveat that you can avail of tax breaks(as in France). Higher rates will hurt all businesses, but it will be far worse if governments start interfering to pick winners. Tax competition is generally a good thing.

It is hugely beneficial to the larger markets in the EU who already operate from a a position of strength (more capital, more labour, more entrepeneurs). The tax reciepts of smaller countries wouldn't benefit as much from increased trade where as a large countries would.

As beeftotheheels says, that's based on a compulsory CCCTB, which nobody is proposing, and for which there is no support. The optional CCCTB that's being proposed, on the other hand, has high levels of business support - even in Ireland, opposition and support are even, and we're the most opposed country.

cordially,
Scofflaw

paddy0090

beeftotheheels wrote: »

This argument is premised on a compulsory CCCTB applicable to MNCs and that is not what the current proposal is for. The current proposal is for an optional CCCTB aimed at SMEs and the Commission has come out against making it compulsory based on subsidiarity issues.

If a CCCTB was going to reduce the tax base for a business in a "competitive" state while increasing the tax base in high tax state then no business would opt into it.

Excuse my ignorance I'm about 2 years behind on this issue. I wasn't aware it was optional or that it was aimed at SMEs. What's to stop a country offering tax incentives to adopt it? IMO optional today compulsory tomorrow. Remember Sarko promising us our CT rate was safe?

Tbh, had to look that word up just to be sure. The EU under the influence of federalists, and in some cases plain jane technocrats, has constatnly sought to expand it's role and powers. It now has a president and a foreign minister, as we speak it is working towards some kind of political union in the pact for competivness. The principle of Subsidiarity will still apply if it's compulsory. So if 'subsidiarity issues' was their line I wouldn't take it that it's the line.

mlumley

RichardAnd wrote: »

http://www.rte.ie/news/2011/0511/economy1.html


For those without the time to read the article, it basically outlines that Irish interest is taking a back seat to Greek issues right now. It further goes on to state, no surprise, that the French seem adament that Ireland will not get a reduction until our corporation tax rate is raised.

QUOTE]


Then why doesnt Ireland raise its tax leval to the same as France, then, apply the same consetions as France that efectivly brings down the actual rate that is paid over there? Cant see how Frace could grumble at that seeing as we would have the same system as they do.

Scofflaw

paddy0090 wrote: »

Excuse my ignorance I'm about 2 years behind on this issue. I wasn't aware it was optional or that it was aimed at SMEs. What's to stop a country offering tax incentives to adopt it? IMO optional today compulsory tomorrow. Remember Sarko promising us our CT rate was safe?

I don't recall Sarkozy saying that, but if it was in respect of Lisbon and the EU, he was quite right. Unfortunately, what we're haggling with France over isn't anything to do with the EU as such - our bailout is essentially a multilateral deal, and France can ask for whatever it wants in exchange for its assent to a reduced interest rate.

paddy0090 wrote: »

Tbh, had to look that word up just to be sure. The EU under the influence of federalists, and in some cases plain jane technocrats, has constatnly sought to expand it's role and powers. It now has a president and a foreign minister, as we speak it is working towards some kind of political union in the pact for competivness. The principle of Subsidiarity will still apply if it's compulsory. So if 'subsidiarity issues' was their line I wouldn't take it that it's the line.

Subsidiarity is rather more than just a word, though - it's a legal principle. Anything the EU does has to be more appropriate to the European level than the national, and legislation can be struck down because it would be better done at the national level.

In this case, the Commission has itself described a compulsory CCCTB as against the principle of subsidiarity, which would make it hard for it to argue that it wasn't.

More generally, the EU didn't assign itself a president or a foreign minister, and cannot "expand its powers" except as allowed by the Treaties. That was demonstrated during the German constitutional challenge to the Lisbon Treaty, which concluded that the Member States remain "masters of the Treaties" - that is, the EU is governed by the Member States, not the reverse. If increased political union comes out of the present crisis, it will be only because the Member States decide that it should do so. So-called 'competence creep' is is something that happens when the EU is given the power to harmonise, say, EU dog licences, and finds that in order to do so, it also must be able to regulate breeds, even though that wasn't explicitly part of the legislation requiring it to harmonise the licences.

cordially,
Scofflaw

mlumley

Scofflaw wrote: »

Interesting, not least (in my view) for the final comments by Lucinda:



Imagine! France and other countries coming from a different position to Ireland, and that fact being acknowledged by an Irish Minister! Clearly she's a traitress.

amused,
Scofflaw

No she isnt a traitress, the first thin a minister does in the EU is to swear alegance to the EU above their own country. :eek: She is an Eurocrat, and an Irish one at that.

beeftotheheels

paddy0090 wrote: »

Excuse my ignorance I'm about 2 years behind on this issue. I wasn't aware it was optional or that it was aimed at SMEs. What's to stop a country offering tax incentives to adopt it? IMO optional today compulsory tomorrow. Remember Sarko promising us our CT rate was safe?

Tbh, had to look that word up just to be sure. The EU under the influence of federalists, and in some cases plain jane technocrats, has constatnly sought to expand it's role and powers. It now has a president and a foreign minister, as we speak it is working towards some kind of political union in the pact for competivness. The principle of Subsidiarity will still apply if it's compulsory. So if 'subsidiarity issues' was their line I wouldn't take it that it's the line.

In order to make it compulsory I believe that a treaty change would be required (as do the Commission but a different one to the one I think it will require) which we could veto.

The Commission thinks that there will be mass take up as a means to cut red tape and encourage businesses, I think it is a mess and very few businesses will take it up, especially those with significant operations in Ireland. Once it becomes clear that businesses do not favor it then the Commission will be forced to acknowledge that it is not facilitating the common market, and all arguments relating to having any legal basis for making it compulsory evaporate.

If businesses genuinely favor it and adopt it then I will stand corrected. But they will not favor it unless the compliance costs saved outweigh the benefits to their current tax strategy (which generally involves shifting profits within the law into competitive tax jurisdictions). For the likes of Google and MS the compliance cost savings would need to be enormous (at least a billion per year) which they just won't be.

All the studies on this in Ireland (like the IBEC study) show that businesses established here don't favor it, and are then being used as evidence that it is a bad thing which we should oppose. My view is that if it is optional (which it necessarily is under the current treaty), and businesses don't favor it, then they won't opt in, meaning it is a bureaucratic waste of time but not any real threat to Ireland Inc.

paddy0090

Scofflaw wrote: »

I don't recall Sarkozy saying that, but if it was in respect of Lisbon and the EU, he was quite right. Unfortunately, what we're haggling with France over isn't anything to do with the EU as such - our bailout is essentially a multilateral deal, and France can ask for whatever it wants in exchange for its assent to a reduced interest rate.

I wasn't referring to the interest rate just trying to show how things change. But yeah your right they have us backed into a corner and are free to make whatever demand they want. They are perfectly entitled to pursue there national interest. Do we have to agree with it?

Subsidiarity is rather more than just a word, though - it's a legal principle. Anything the EU does has to be more appropriate to the European level than the national, and legislation can be struck down because it would be better done at the national level.

In this case, the Commission has itself described a compulsory CCCTB as against the principle of subsidiarity, which would make it hard for it to argue that it wasn't.

Hard maybe but far from impossible. Has it not argued against trade tariffs and simulatneuosly given export subsidies to EU farmers(ours included). Perfectly capable of talking out of both sides of it's mouth.

More generally, the EU didn't assign itself a president or a foreign minister, and cannot "expand its powers" except as allowed by the Treaties. That was demonstrated during the German constitutional challenge to the Lisbon Treaty, which concluded that the Member States remain "masters of the Treaties" - that is, the EU is governed by the Member States, not the reverse. If increased political union comes out of the present crisis, it will be only because the Member States decide that it should do so. So-called 'competence creep' is is something that happens when the EU is given the power to harmonise, say, EU dog licences, and finds that in order to do so, it also must be able to regulate breeds, even though that wasn't explicitly part of the legislation requiring it to harmonise the licences.

cordially,
Scofflaw

Lisbon was a slightly watered down version of The constitution which was rejected by voters in France and the Netherlands. Some of them didn't understand it, some of them never read it, some of them were pissed off with there national governments, others had issues with immigration and others the loss of sovereignty it implied. Direct vs Representative democracy is probably a debate for another forum but to what extent do the member states actually control the EU. If increased political union comes about because of the current political crisis it will be because of a failing EMU and the fear of such a failure. It's a symbiotic relationship. We can say no, but we can't.

I think the intent is there though. Someone convinced Obama to go into Libya despite the advice of his defense secretary. As someone else on this forum said there are many federalists in the EU and they see it as the best way forward. I voted for all the treaties (bar the last one as I wasn't here) but I'm not a federalist. I'd have no trouble trusting a technocrat out to do a job as well as they could, but I fear the influences around them and the law of unintended consequences.

beeftotheheels wrote: »

In order to make it compulsory I believe that a treaty change would be required (as do the Commission but a different one to the one I think it will require) which we could veto.

Not familiar with the legal requirements but AFAIK we're only required to hold a treaty referendum when we give the EU more powers. We could have a treaty with them which acknowledged a compulsory CCCTB in 2-26 member states.

The Commission thinks that there will be mass take up as a means to cut red tape and encourage businesses, I think it is a mess and very few businesses will take it up, especially those with significant operations in Ireland. Once it becomes clear that businesses do not favor it then the Commission will be forced to acknowledge that it is not facilitating the common market, and all arguments relating to having any legal basis for making it compulsory evaporate.

If businesses genuinely favor it and adopt it then I will stand corrected. But they will not favor it unless the compliance costs saved outweigh the benefits to their current tax strategy (which generally involves shifting profits within the law into competitive tax jurisdictions). For the likes of Google and MS the compliance cost savings would need to be enormous (at least a billion per year) which they just won't be.

All the studies on this in Ireland (like the IBEC study) show that businesses established here don't favor it, and are then being used as evidence that it is a bad thing which we should oppose. My view is that if it is optional (which it necessarily is under the current treaty), and businesses don't favor it, then they won't opt in, meaning it is a bureaucratic waste of time but not any real threat to Ireland Inc.

The interests of Ireland Inc will always take a back seat to Germany Inc and France Inc they are after all the core of Europe. If it can be made to work for them then that will likely be that. It won't matter if it's not compulsory in Ireland the effect will be the same. 'Two speed' or 'Core and Non-core' Europe aren't just fringe ideas anymore.

If I thought it would remain optional then I wouldn't be opposed to. But as long as phrases like tax dumping (competition) remain on the French political agenda it don't think it will.

lmimmfn

So we have a common currency and different interest rates for each country requiring a bailout and more favourable conditions per country?

luckily we're united in europe and a common currency then eh?

* awaits the end of the euro *

Scofflaw

paddy0090 wrote: »

I wasn't referring to the interest rate just trying to show how things change. But yeah your right they have us backed into a corner and are free to make whatever demand they want. They are perfectly entitled to pursue there national interest. Do we have to agree with it?

Obviously not!

paddy0090 wrote: »

Hard maybe but far from impossible. Has it not argued against trade tariffs and simulatneuosly given export subsidies to EU farmers(ours included). Perfectly capable of talking out of both sides of it's mouth.

Again, somewhat different, because neither of those are legal issues. Politically, one can always talk out of both sides of one's mouth - and in a case where you're arguing against other people putting tariffs on your exports while simultaneously giving oneself export subsidies it's not even the case that one is doing so - legally, on the other hand, one cannot.

paddy0090 wrote: »

Lisbon was a slightly watered down version of The constitution which was rejected by voters in France and the Netherlands. Some of them didn't understand it, some of them never read it, some of them were pissed off with there national governments, others had issues with immigration and others the loss of sovereignty it implied. Direct vs Representative democracy is probably a debate for another forum but to what extent do the member states actually control the EU. If increased political union comes about because of the current political crisis it will be because of a failing EMU and the fear of such a failure. It's a symbiotic relationship. We can say no, but we can't.

That's different, too - sorry, I keep saying this! What we are constrained to do by our own perceived best interests does not mean that we are not sovereign, only that our choices are limited. As a nation we can always refuse further integration - the question of whether we feel it's in our best interests to do so (or against our interests not to do so) is a sovereign question.

paddy0090 wrote: »

I think the intent is there though. Someone convinced Obama to go into Libya despite the advice of his defense secretary. As someone else on this forum said there are many federalists in the EU and they see it as the best way forward. I voted for all the treaties (bar the last one as I wasn't here) but I'm not a federalist. I'd have no trouble trusting a technocrat out to do a job as well as they could, but I fear the influences around them and the law of unintended consequences.

I'd agree with all of that. To be honest, although I'm a europhile, and should perhaps expect federalists to feel they didn't need to hide their colours around me, I don't really meet any.

paddy0090 wrote: »

Not familiar with the legal requirements but AFAIK we're only required to hold a treaty referendum when we give the EU more powers. We could have a treaty with them which acknowledged a compulsory CCCTB in 2-26 member states.

Giving the EU the power to arrange the tax base of direct taxation would undeniably involve giving them a power they don't currently have.

paddy0090 wrote: »

The interests of Ireland Inc will always take a back seat to Germany Inc and France Inc they are after all the core of Europe. If it can be made to work for them then that will likely be that. It won't matter if it's not compulsory in Ireland the effect will be the same. 'Two speed' or 'Core and Non-core' Europe aren't just fringe ideas anymore.

From a perspective of where the power largely lies in the EU, it never has been - the Franco-German axis has always been the motor of the EU. Ireland is traditionally pro-EU, as are most of the smaller nations, because Franco-German power constrained through the EU is much better than unconstrained.

paddy0090 wrote: »

If I thought it would remain optional then I wouldn't be opposed to. But as long as phrases like tax dumping (competition) remain on the French political agenda it don't think it will.

See above. There isn't an easy legal route to it, even if France wanted it, and France hasn't indicated any wish for a compulsory CCCTB. Being a tax matter, it's under unanimity, and Ireland would not be the only opponent of a compulsory system, although we're coming close to being the only opponent of the proposed optional one.

Coming back to my earlier question - is your opposition based on the idea of a compulsory CCCTB?

cordially,
Scofflaw

paddy0090

Scofflaw wrote: »

Again, somewhat different, because neither of those are legal issues. Politically, one can always talk out of both sides of one's mouth - and in a case where you're arguing against other people putting tariffs on your exports while simultaneously giving oneself export subsidies it's not even the case that one is doing so - legally, on the other hand, one cannot.

Totally disagree there! To say one thing and do another - actions speak louder than words - the other is to some degree talking out of both sides of you're mouth.

Legally one can demonstrate they where paying attention in class!

That's different, too - sorry, I keep saying this! What we are constrained to do by our own perceived best interests does not mean that we are not sovereign, only that our choices are limited. As a nation we can always refuse further integration - the question of whether we feel it's in our best interests to do so (or against our interests not to do so) is a sovereign question.

It was a sovereign question before the bailout! Still is. So's declaring war. As it develops disengaging becomes a less viable option.

Giving the EU the power to arrange the tax base of direct taxation would undeniably involve giving them a power they don't currently have.

They wouldn't need to have it over us though or even over all 27 member states. In fact they wouldn't even need to be able to change the rates. Just make it compulsory in a core of maybe 6 countries. We could opt out of such an arrangement as we could the Euro. There by giving them no power.

From a perspective of where the power largely lies in the EU, it never has been - the Franco-German axis has always been the motor of the EU. Ireland is traditionally pro-EU, as are most of the smaller nations, because Franco-German power constrained through the EU is much better than unconstrained.

The current pact is driven by a summit in Deauville. It's essentially growth and stability 2.0, the original was torn up by France and Germany (yes I know we broke it). They may well tear this one up when it suits them. Obviously some constraint is better than none.

See above. There isn't an easy legal route to it, even if France wanted it, and France hasn't indicated any wish for a compulsory CCCTB. Being a tax matter, it's under unanimity, and Ireland would not be the only opponent of a compulsory system, although we're coming close to being the only opponent of the proposed optional one.

But there is a movement towards a two speed Europe. Unanimity becomes redundant in that scenario. Has it always been optional or is this a consession?

Coming back to my earlier question - is your opposition based on the idea of a compulsory CCCTB?

Yes. I don't think it will stop at optional. Isn't that the basis of most opposition I was surprised to hear that it was optional. It's hard to see how that will stop profit dumping.

An optional CCCTB that delivers savings and cuts red tape would be a victory for technocrats and the wider EU economy. What then for the federalists?

maninasia

Scofflaw wrote: »

Unfortunately, the idea that the money was all from eurozone banks seems to persist despite the complete lack of evidence, and indeed in the teeth of evidence pointing the other way. Presumably it's a psychological defence against having to feel grateful for being bailed out.

On the OP, I seem to recall that the objection to the EU/IMF bailout was essentially that the rate was too high - although it was a good deal lower than the markets have been prepared to offer for quite some time. Now that the rest of Europe may be about to absorb even more of our default risk by giving us rates we haven't seen for several years, will they earn any kudos? I doubt it - the problem is that they're lending us the money to do what the previous government trapped us into, so from our point of view they're an enabler of bad policy. Of course, from their point of view, we're borrowing their money to pay back our US and UK creditors - the eurozone taking on the risks of reckless lending in London and New York. No wonder the US Treasury Secretary nixed the idea of Ireland burning the bondholders.

cordially,
Scofflaw

Good point, but I must point out that the ECB is still covering the continental bank debts and the 'eurozone' by proxy i.e. they don't want to see default in Ireland due to the chain reaction in other PIGS nations which could bring down French/German banks and the integrity of the Eurozone. I think people have figured out that Ireland is a pawn in this game but are confused as to the actual motivation behind the bailout.

beeftotheheels

paddy0090 wrote: »

Has it always been optional or is this a consession?

Yes. I don't think it will stop at optional. Isn't that the basis of most opposition I was surprised to hear that it was optional. It's hard to see how that will stop profit dumping.

An optional CCCTB that delivers savings and cuts red tape would be a victory for technocrats and the wider EU economy. What then for the federalists?

It has always been proposed as being optional although you would be forgiven for missing that in the Irish Press coverage (where it is never mentioned).

Making it compulsory would require we the Irish people give the EU a power which it currently does not have so there would have to be a referendum.

We can stop it being compulsory. So why object to it at this stage when engagement could reduce our interest costs and we retain the right to veto it being made compulsory at a later stage?

I'm not saying that it is a good thing, I don't think that all that many businesses will opt in. But I don't view it as a huge threat either, precisely because I think not all that many businesses will opt in.

View

mlumley wrote: »

No she isnt a traitress, the first thin a minister does in the EU is to swear alegance to the EU above their own country. :eek: She is an Eurocrat, and an Irish one at that.

Calm down. Government Ministers don't swear allegiance to the EU. Lucinda Creighton is a "regular" Junior Minister in our government just like all the other Ministers/Junior Ministers.

View

lmimmfn wrote: »

So we have a common currency and different interest rates for each country requiring a bailout and more favourable conditions per country?

luckily we're united in europe and a common currency then eh?

* awaits the end of the euro *

The Swiss Cantons, despite sharing a common currency, have different interest rates on the Cantonal bonds they issue. Does this mean you are also waiting for the end of the Swiss Franc?

Day 100 has arrived, and Noonan is having another crack at the old "burning the bondholders" line with Europe. It it an Irish attempt at playing hardball with the french on the terms of their support for an interest rate cut?

Us applying a haircut to some of our bank debts would have a big knock-on effect for french banks and investment firms who were invested in Ireland when the banks collapsed. They would have to carry the can for some of their own losses instead of us paying for everything. Even the talk of it happening would have significant financial implications for the french stock market. Investors would be terrified of it.

I think a haircut on the debt is something that should be done in any case, for reasons of pure social justice and moral hazard, but even if we're not going to do it, the threat of doing it is still a decent bit of leverage to use against Sarkozy to get him to get off our case about hiking the 12.5% corporate rate in return for an interest rate cut.

Is Noonan being a crafty auld hoor again or is he just pressing ahead with something that FG promised before the election?

careca11

Deleted User wrote: »

Day 100 has arrived, and Noonan is having another crack at the old "burning the bondholders" line with Europe. It it an Irish attempt at playing hardball with the french on the terms of their support for an interest rate cut?

Us applying a haircut to some of our bank debts would have a big knock-on effect for french banks and investment firms who were invested in Ireland when the banks collapsed. They would have to carry the can for some of their own losses instead of us paying for everything. Even the talk of it happening would have significant financial implications for the french stock market. Investors would be terrified of it.

I think a haircut on the debt is something that should be done in any case, for reasons of pure social justice and moral hazard, but even if we're not going to do it, the threat of doing it is still a decent bit of leverage to use against Sarkozy to get him to get off our case about hiking the 12.5% corporate rate in return for an interest rate cut.

Is Noonan being a crafty auld hoor again or is he just pressing ahead with something that FG promised before the election?

he is being crafty in suggesting it , but to go ahead with the plan would have to be approved first by all eu finance minister's , the french would surely veto it ,
noonan should go further and state if he's not given the power to burn the bondholder's, ireland will reduct is corporation tax ....................................its high time we took europe be the short and curlies instead of the other way round

careca11

careca11 wrote: »

noonan should go further and state if he's not given the power to burn the bondholder's, ireland will reduct is corporation tax ...its high time we took europe be the short and curlies instead of the other way round

I've been saying this since france started to have a little hissy fit over corporation tax a few months ago. If i was Noonan i would use all the publicity that this row has created to tell the french government to go stuff themselves and their self-interest, right up on the world stage. I would very publicly and noisily drop the corporate tax rate to 10% and offer an introductory 2 years at 5% to every new company who sets up a base in ireland and creates x amount of new jobs through foreign direct investment, and send out a REAL signal to the world that Ireland is open for business.

It was the export led and multiational FDI economy that got us out of the last recession, why shouldn't it work again this time round? All we have to do is create the conditions for external investment. STUFF france if they don't like it-they have been making unilateral moves ever since they joined the EEC. I would much rather a pot to piss in in my own house than the goodwill of a well to do neighbour.

France's stance on this is deceitful and self serving. Their overall corporate tax rate is something of the order of 5-8% in total, when you take account of all the tax loopholes they allow FDI companies to avail of. Ireland has more significant foreign direct investment than france not just because of it's corporate tax rate, but because it is an attractive place to set up an international base for several reasons. France's moves on our 12.5% rate are just trying to hurt that attractiveness in fiscal terms for it's own gain.

Our sovereign control over our corporate tax rate is one of only a few cards we hold that we can play to our advantage to bring some external stimulus into our country without the threat of a veto from here, there, and everywhere. Noonan should stop pandering to a two-tier europe and show that we won't be bullied and we aren't going to live on their drip feed, and that we can take unilateral moves in our own interest too, just as they are doing.