ICTU Urges Irish Government To Rethink Stance On Tax Harmonisation

by Robin Pilgrim, LawAndTax-News.com, London

05 January 2004

The Irish Congress of Trade Unions (ICTU) has urged the government to reconsider its stance on tax harmonisation in the EU, arguing that the Republic is unlikely to be permitted to retain its 12.5% corporate tax rate indefinitely.

Although the Irish government has traditionally been staunchly opposed to the possibility of any form of tax harmonisation, the ICTU argued, in a submission to the government's Enterprise Strategy Group, that low corporate taxation rates will not afford the Irish economy protection from the increasing economic pressures imposed on it as a result of globalisation.

The Congress put forward proposals for limited harmonisation, under which companies based in Ireland could still pay the 12.5% rate, but would need to increase their investment in research and development (R&D) in order to qualify.

A competitive corporate tax rate could be achieved, according to the ICTU, by entering into negotiations with other EU member states with regard to the creation of a system of different corporate tax rate 'bands', according to the level of a country's economic development.

"At the end of the day, our judgement is that the Europeans will not wear tax competition indefinitely, and it might be better to negotiate a deal now rather than have it forced upon us," the labour body concluded.

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