Paschal: We’ll face down EU on tax plan
IRELAND will fight an EU proposal to allow a majority of member states to change the tax rules for all instead of the existing system whereby unanimity is required, Finance Minister Paschal Donohoe pledged yesterday – as fears grew about our position after Brexit.
This country will oppose a move to qualified majority voting (QMV), which could be applied in the area of corporation tax, where Ireland has held an advantage over other nations due to our low rate of 12.5%.
The Irish sales pitch for foreign direct investment was unsuccessfully targeted by France’s then-president Nicolas Sarkozy in 2011 in a famous ‘Gallic spat’ with Enda Kenny, the taoiseach at the time.
But last month, EU economics commissioner Pierre Moscovici published a report recommending ‘more efficient and democratic decision- making in EU tax policy’. Mr Donohoe described it as a roadmap, ‘which aims to start a debate around changing the system of voting for tax (matters), from unanimity to QMV’.
He told the Oireachtas Finance Committee: ‘This is a highly sensitive suggestion for many member states, including Ireland, as any move to change the voting method used for tax would reduce sovereignty.’ He said the current system was working well, adding: ‘Given the large volume of important agreements reached at EU level on tax issues, I do not see the need for, or merits of, any proposals to move away from the requirement for unanimity.’
The European Commission roadmap identifies the ‘passerelle clause’ as being the most feasible option for moving away from the unanimity voting procedure. This provides that the European Council could unanimously decide to move an entire policy area – such as corporation tax – from unanimity voting to QMV. However, Mr Donohoe pointed out that since 2015, the lack of unanimity has not prevented the agreement of an unprecedented 21 tax initiatives.
‘This is evidence of real, tangible progress made through all member states working together for the benefit of the whole union,’ the Finance Minister said.
Mr Donohoe said that ‘regrettably’ the UK was leaving the EU, and ‘that means that some things are going to change’. However, he said Ireland will ‘remain an active and enthusiastic member of the EU’.
He added: ‘In terms of taxation, it is our view that all member states, working together for the benefit of the whole union, is the way to achieve the best results and real, tangible progress.’