Varadkar’s footing on tax rate is not secure

CAUGHT between Brexit and a hard place, Taoiseach Leo Varadkar sought to bolster our European ties and defend core national interests in his address to the European Parliament.

In terms of commitment to the other 27 member states Mr Varadkar was on solid ground, but in seeking to defend our controversial corporation tax system in the face of stern opposition his footing was less secure.

If there is a race to the bottom in securing foreign direct investment Ireland has won it and there is no point in pretending otherwise. We did what was expedient and necessary, taking advantage of an opportunity at a time when there was no barrier to doing so.

Mr Varadkar stressed that EU member states should be able to retain the ability to set their own tax rates.

He sought to make a case for “peripheral and less developed countries whose domestic markets are small and need inward investment”. With German and French eyes fixed enviously on our arrangements his arguments won’t find much sympathy. With growth and employment rates powering on, the benefits of our multinational ties are evident, but we are unlikely to have it all our own way. Our 12.5pc corporation tax rate has been central to our success but it is in the crosshairs of other EU countries. Mr Varadkar believes that corporations must “pay their fair share of tax”. “We cannot tolerate a situation where large companies can avoid paying any taxes anywhere,” he said.

We shall see. But sometimes the only way to keep what you have is to change, and Europe is watching.