Corporation Tax and the EU

The Lisbon Treaty does not allow for corporation tax to be harmonised as far as I can tell.

I think that corporation tax will ultimately be harmonised because it is fundamentally wrong that EU states should engage in a low taxation bidding war to the benefit of corporate entities. This is the political reality in my book. Ireland is quite cleverly trying to delay this as long as possible to its own benefit.

What Ireland needs is some flexibility to counterract the geographical and population limitations which make us less competitive. If it ends up as a pure meritocracy then we will forever be sitting in the waiting room cap in hand looking for a few bob from the main men in the flash suits sitting at the top table. The men in flash suits will always have conditions.

Taxation allows us to trade independently and hopefully to finance ourselves without begging. If we cannot distort competition through taxes then we are in trouble. The question is what are to be the limits on harmonisation and how else Ireland can be allowed the latitude to get the competitive edge it needs to make up for its location, geographical size and population size?

Anyway, I have drifted a bit here. Essentially my point is that Ireland's current approach to Corporation Tax constitutes sharp practice which will not and should not be tolerated on an ongoing basis. It makes us look like we can't get our nose out of the greasy till. I thnk we should show some back-bone and stop throwing it up as is it is some kind of overriding fundamental moral principle.

Jaysus Zhou, you're on form today.

I have something important to do. I am at that phase where you clean the whole house before studying for an exam. I'll be stuck in here all evening. MN blackout begins soon.

Zhou,

I agree entirely with you about corporation tax. It must eventually be harmonised to a large extent.

I think that the current policy to corporation tax is getting close to that of becoming a tax-haven, and I think that this is really a betrayal of 1916 and the war of independence. The policy of those who fought for Irish independence was self-reliance. To me, self-reliance means that the country supports itself. Joining the EU on an equal basis to other states does not change this. When we were relatively poor, we received aid. Now that we are well off, we will be contributing to others. (Just as someone who joins a trade union sometimes receives benefits, and sometimes pays for others benefits).

However, the policy of skimming off taxes due to Britain, France and Germany (which current policy seems to amount to) does change this policy of self-reliance and goes against everything that Pearse, Collins, De Valera, etc. stood for.

Quite apart from anything else, we should be planning for the end of the low corporation tax regime because it cannot be sustained for much longer. We should be looking instead at altering the tax system so that, for example, research and development is encouraged. (I know that AT and others will say that we do this already, but if we had a relatively standard tax rate, then the tax relief benefits for R&D would actually be higher).