European Union heads of state have decided to grant legal guarantees to protect
national sovereignty in several areas of national policy in a bid to smooth the
path towards Ireland's acceptance of the Lisbon Treaty and its ultimate adoption
across the EU.
Meeting in Brussels on June 18 and 19, the European Council agreed on legal
guarantees for Ireland in a number of areas, including taxation. EU leaders
also unanimously approved the reappointment of José Manuel Barroso to
head the European Commission and agreed on reforms to strengthen the supervision
of financial services.
The Council’s decision comes as a response to Irish concerns regarding
loss of sovereignty in key areas of policy, which culminated in the rejection
of the Lisbon Treaty in a referendum last summer. The legal guarantees are designed
to pave the way for “a new consultation of the Irish people.”
"The final text is acceptable for Ireland but also for the other member
states," declared the current President of the European Council, the Czech
Prime Minister Jan Fischer.
According to the Council, these measures are “fully compatible”
with the treaty and therefore they will not need re-ratification by the other
member states.
The Lisbon Treaty was spectacularly, although not entirely unexpectedly, derailed
by the Irish referendum as more than 53% of voters rejected the text following
a successful campaign by the 'no' camp, which argued that the treaty would mean
Ireland losing sovereignty over many aspects of domestic policy, especially
taxation. The treaty is designed to replace the former European constitution,
which was thwarted after being rejected by voters in France and the Netherlands
in 2005.
Supporters of the Irish ‘No’ campaign argued that signing up to
the Lisbon Treaty would place Ireland on a slippery slope towards tax harmonization
and lead to an erosion of the country’s hard-won tax competitiveness,
in particular its sacred 12.5% corporate tax rate, which is still one of the
EU’s lowest rates.
The treaty proposes to restrict the national veto in dozens of policy areas
in a bid to “streamline” political decision-making in the EU, which
now comprises 27 member states. However, tax experts have countered that Ireland
would have, in any case, retained its veto on newly-proposed EU tax measures
under the treaty, and therefore would not be forced to accept current proposals
to harmonize the EU corporate tax base, which treaty opponents fear is the thin
end of the tax harmonization wedge.
Mark Redmond, Chief Executive of the Irish Taxation Institute, told an Irish
parliamentary committee last November that: “In the course of the debate
on the Lisbon Treaty major concerns were raised about our ability to maintain
control over our corporation tax rate should the Treaty be ratified. This issue
was linked by some in the debate to the separate matter of EU proposals to harmonise
the corporate tax base throughout the EU – known as CCCTB. At this point
I would like to stress that these two issues are not directly linked –
the Lisbon Treaty does not require Ireland to participate in the CCCTB and it
does not facilitate the imposition of the CCCTB upon Ireland."
"The Lisbon Treaty does not affect Ireland’s tax sovereignty,”
the Institute of Chartered Accountants in Ireland stated at the time of the
referendum. “It is not related to the Common Consolidated Corporate Tax
Base, which is a framework of proposals being worked upon by European Union
civil servants, which even if they come to fruition cannot be imposed on Ireland.”
The second Irish referendum on the Lisbon Treaty is expected to be held in
October. If the European Commission and the Irish government manage to convince
the Irish public to make the ‘right’ decision in the second vote,
the treaty could be fully ratified by the end of the year.
“I would like to pay tribute to the Czech Presidency of the EU for securing
this crucial deal to allow us to move forward,” commented President of
the European Parliament, Hans-Gert Pöttering. “We would dearly like
to see the Lisbon Treaty enter into force by the end of 2009 because we are
convinced that it provides a better framework for effective and coordinated
action by the European Union, on the basis of greater democracy and transparency.”
Irish Prime Minister Brian Cowen welcomed the Council's decision. “We
came here with two aims,” he said in a statement to the Council. “Ireland
wanted firm legal guarantees. We got them. We wanted a commitment to a protocol.
We got that.”
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