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Ibec: Ireland Should Veto Harmful EU Tax Proposals

by Jason Gorringe,, London

14 September 2017

Business group Ibec has said that it is essential that Ireland retains full sovereignty over decisions on tax policy and that the Government should block any moves by the EU that jeopardize this right.

Ibec was responding to comments made by European Commission President Jean-Claude Juncker in his State of the Union Address. Juncker said that he was strongly in favor of the EU "moving to qualified majority voting" for decisions on key tax proposals, such as the common consolidated corporate tax base, VAT, the taxation of the digital industry, and the financial transaction tax.

"Europe has to be able to act quicker and more decisively," he argued.

A qualified majority is reached if two conditions are met: 55 percent of member states vote in favor, and the proposal is supported by member states representing at least 65 percent of the total EU population. At present, a unanimous vote is required on matters member states consider to be sensitive, including the harmonization of national legislation on indirect taxation.

Ibec Director of Policy and Public Affairs Fergal O'Brien expressed strong concern at Juncker's suggestion. He said: "It is essential for the Irish economic model that we maintain full sovereignty when it comes to decision making on all taxation matters. Now more than ever, in a post-Brexit Europe, Irish businesses must be competitive."

"The European Union brings many advantages in that respect for a member state such as Ireland, through increased trade flows and membership of the single market, however, we've got to ensure that we maintain control over our ability to adapt our own tax and labor market policies to match the particular needs of our economic model."

O'Brien said that the proposal for a common consolidated corporate tax base (CCCTB) is misguided and runs against both the spirit and law of international efforts to align profit with economic substance. He warned that it would "result in an unjustified transfer of taxing rights from small open economies to large closed ones," and would be "bad for Europe's exporters and for the Irish economy."

Ibec estimates that a CCCTB would cost Ireland more than EUR4bn (USD4.8bn) a year in tax revenues.

O'Brien stressed that the EU must not undermine the ability of its member states to compete post-Brexit, and urged the Irish Government to "be prepared to use its Council veto if necessary, in order to block any moves at an EU level that jeopardize our tax sovereignty."

TAGS: tax | business | European Commission | value added tax (VAT) | Ireland | law | corporation tax | United Kingdom | legislation | tax rates | tax reform | trade association | trade | European Union (EU) | Europe | Tax | Financial Transactions Tax (FTT)

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