Minister Reiterates Ireland's Hostility to Tax Harmonisation

by Jason Gorringe, Tax-News.com, London

27 June 2003

Ireland will continue to oppose any measures that will lead to a tax harmonisation in Europe said Irish finance minister Brigid McManus whilst addressing the Dail European Affairs Committee on Wednesday.

"The right of member states to decide upon taxation issues allows them to take account of their own position in the economic and business cycle. Losing this right could severely impair the ability of each member state to manage the economic conditions particular to it," commented the assistant secretary at the Department of Finance.

Ireland is determined to defend its business friendly tax regime that has contributed much to the economy's success in recent yeas, and not surprisingly is sensitive on the issue of losing control of its own taxation policy to Brussels bureaucrats through the introduction of qualified majority voting. At 31.2% of GDP, Ireland's tax and social security burden as a proportion of the economy is the lowest in the EU, way below the European average of 41%.

However, Ireland is by no means alone in having reservations over the direction the new European Constitution will take the union. The UK has always held a firm anti-federalist stance, with Spain and Sweden also expressing criticism over aspects of the new constitution.

Reacting to a report by EU Commissioner Mario Monti calling for more centrally controlled tax policy as a means to support the EU's employment policies McManus stated: "We view this approach by the Commission as going far beyond the idea of 'co-ordination of EU policy' in the direct tax area, as being a disproportionate approach to dealing with obstacles and as interfering with member states autonomy and sovereignty in tax matters."

She added: The right to chose the level of public spending and how this will be funded is a basic function of the democratic process. It touches directly on the relationship of the citizen to the state. We want to preserve that invaluable asset by retaining its use at national level."

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