Tanaiste Announces Corporate Tax Pledge

by Jason Gorringe, Tax-News.com, London

13 May 2002

The Irish Minister for Trade and Employment and Progressive Democrat leader, Mary Harney announced on Thursday that her party - which has been the junior partner in government with Fianna Fail for the past five years - is the only one which has pledged to legislate to freeze corporation tax at 12.5% following the May 17 general election.

The Tanaiste has stressed many times the importance of low corporate tax rates in attracting and retaining international investment and business. However, although the government has promised the European Union that the rate will increase to 12.5% from 2003, several of the other political parties have indicated that they might raise corporate taxation beyond that level. (Although Labour, the country's main socialist contender has also pledged not to increase the 12.5% rate if elected to government.)

'The Progressive Democrats see no circumstances at all where an increase in the corporate tax rate would be justifiable,' she announced last week. 'We must remain rock solid in our commitment here. We are the only party therefore who will legislate to make the 12.5% rate permanent, and safeguard it from increases.'

The Trade Minister went on to explain that although other countries have higher corporate taxes, the revenue from their business sectors actually accounts for a lower proportion of GDP than in Ireland, citing Germany and France as examples of this.

She revealed that Irish corporation taxes account for around 16% of all revenue (4.6 billion euros), which covers all of the government's spending on education. In addition, according to Ms Harney, the low tax rate has had a beneficial effect on employment levels, creating jobs at all levels:

'This happened because Ireland is now an enterprise society, a low tax economy and a jobs-friendly place to do business. And this delivers record revenue for social spending,' she explained on Thursday.

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