AN ARGUMENT ERUPTED IN THE European Parliament among MEPs over Ireland’s refusal to change its low corporate tax rate, RTÉ reports.

Ireland’s corporate tax rate of 12.5% is among the lowest in the EU.

Last week, it emerged that a small group of MEPs tabled a motion demanding that Ireland double the rate.

They argue that Ireland should acknowledge the assistance being provided in the bailout package by removing some of its competitive advantage over other EU members.

Pushing for harmonisation

Speaking on RTÉ’s Drivetime this evening, German Green Party MEP Sven Giegold said he did not just want a new tax rate, but also wants “to harmonise the method by which the tax rate is applied” so that “companies can’t abuse the Irish tax rate” by shifting profits earned elsewhere.

He said that there was no willingness by any Irish party to change that method.

Reacting to questions about protections provided by the Lisbon Treaty, Giegold said: “The Lisbon Treaty is there and of course this doesn’t say there is a need to bail somebody out”. So, he said, when countries are negotiating a deal, there is also a possibility to negotiate the terms of tax rates.

It doesn’t mean the Lisbon Treaty isn’t in place, he said.

Fine Gael MEP Gay Mitchell responded by saying that Ireland can continue to resist the pressure to increase its rate, “unless all 27 members want to put all 27 rates on the agenda”. He said he doesn’t see the other states agreeing to that.

Mitchell appealed to his parliamentary colleagues to bear in mind the difficulties currently facing Ireland: “We need to ask colleagues like Sven” to be sensitive to the cuts that Irish people have to face.

Eight MEPs signed a declaration pushing for Ireland’s rate increase. The European Commission is planning to propose a corporate tax base harmonisation, but told RTÉ that it could not impose a 25% rate. Commission proposals on tax require unanimous voting.

The EU/ECB/IMF bailout deal for Ireland does not require changes to Ireland’s corporate tax rate.

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