IRELAND’S CRUSADE TO seek a lower rate of interest on its EU loans has been dealt a major boost after French finance minister Christine Lagarde said an increase to the corporate tax rate was not necessarily a requirement for an improved deal.
Speaking to reporters at a meeting of G20 finance ministers in Washington, Lagarde said there would “have to be movement” from Ireland if it was to secure a lower interest rate on the EU’s portion of the €67.5bn funding deal – but acknowledged that corporate tax might not part of the deal.
“I don’t know whether it is the 12.5 per cent [corporate tax rate] or the [common consolidated corporate tax] base. We have to take the two components into account,”the Financial Times quotes Lagarde as saying.
Lagarde’s approach comes in contrast to that of her president Nicolas Sarkozy, who is understood to have demanded a corporate tax concession from Enda Kenny in exchange for a more hospitable bailout package.
The comments came after jobs minister Richard Bruton insisted that Ireland would fight “tooth and nail” to protect the 12.5 per cent rate, a move considered to be a fundamental plank of Ireland’s economic growth prospects.
The Irish Times quoted Bruton as telling a meeting of business leaders in Shannon that it was “vital for US companies and other companies investing in Ireland that they have certainty” as to the country’s future taxation policies.
Any moves to undermine the rate or forcing Ireland to increase it would be “disastrous for Ireland”, Bruton said, adding that the new administration would “resist it absolutely”.
No movement is expected on renegotiating Ireland’s bailout interest rate until June, when the heads of the 27 EU governments attend the next meeting of the European Council.
The corporate tax rate is considered especially vital for Ireland’s future growth, with CSO figures continuing to indicate growth in the Irish export sector, while domestic consumer demand continues to suffer.