Olli Rehn: ‘it is likely unfortunately to imply tax increases’

I’d wait for the detail, Brian, before declaring anything ‘safe’.  RTÉ reports the latest comments from European Commissioner for Economic and Monetary Affairs, Olli Rehn, on Ireland’s bail-out application.  From the RTÉ report

European Commissioner for Economic and Monetary Affairs Olli Rehn has reiterated that Ireland would no longer be a low tax economy.

When asked in an interview with RTÉ News if the corporate tax rate was now off the table for good, Mr Rehn said that by Ireland ceasing to be a low tax country it did not imply specific measures to be taken, but ‘it is likely unfortunately to imply tax increases’.

Mr Rehn said that has said there will be conditions attached to the EU/IMF rescue programme, even if the programme is based on the Government’s four-year budgetary plan.

Despite those comments the Irish Finance Minister, Brian Lenihan, maintains that

“I’m quite satisfied on the basis of the discussions to date that the Budget that will be presented to Dáil Eireann on 7th December will be our own Budget, nobody else’s Budget,” Mr Lenihan told RTE Radio.

Which will be technically true once they agree to the conditions…

All of which is worth considering in light of the Green Party’s desperate throw of the dice.

As the iol report notes

[Green Party leader] Mr Gormley said he wanted the current coalition Government to achieve three things before going to the public.

:: Produce a credible four-year plan to show they can make the Budgets balance by 2014, expected this Wednesday.

:: Deliver a Budget for 2011, due on December 7.

:: Secure IMF/EU funding respecting vital Irish interests and restoring stability to the euro, expected in several weeks.

Only after agreeing to all those conditions on the next government will the Green Party risk asking the public.

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  • another

    Evens – Euro Exit in 2011
    7/2 – Revolution
    8/1 – United Ireland under crown sovereignty
    50/1 – Quite acquiesence

  • DC

    In other news today a bear shat in the woods.

  • Alias

    How do the Irish expect to finance the several hundred billion euro cost of bailing-out the eurosystem other than by taxes? All taxes are going to increase dramatically. So the state has rendered its own low tax policy redundant, and the EU gets the tax increases it wants.

  • Alias

    “8/1 – United Ireland under crown sovereignty”

    If the UK becomes a partner along with the EU and the IMF in the loan then the UK will gain substantial control over Ireland’s internal affairs.

  • pippakin

    All taxes will increase. The sad, mad thing is that the government is still saying CT is safe. Personally I think the CT is no sacred cow, didn’t Google get away with knocking it down to 2.5%. I doubt they would have much problem with, say 15%.

    There is no shortage of very rich people in Ireland tax increases should start at the top and bloody well stay there.

  • Mack

    Google get away with knocking it down to 2.5%

    No they don’t. They pay 2.5% tax on their total EMEA (Europe Middle East Africa) profits in Ireland. They still pay 12.5% on the actual profits booked here.

  • Mack

    But apart from that a token rise wouldn’t do any harm..

  • I.M.F.

    Irish monetary failure – It’s time to ditch the Euro:

  • DC

    Ireland in Lehman’s terms?

    http://www.guardian.co.uk/business/2010/nov/22/ireland-bailout-european-debt-crisis

    Looks as though the Euro internally is suffering from a USA/China problem.

    The underlying problem today is the inherent unworkability of the euro. The single currency only works if all its members chug along at much the same rate – with growth, productivity and inflation rates all in synch. If that does not happen, the countries with lower costs and higher productivity run big trade surpluses and countries that have higher costs and lower productivity run big deficits. Over time this leads to big problems in competitiveness that cannot be tackled in the traditional way, through a depreciation of the currency.

    The countries on the fringes of the euro are now in this position, and are being told to deflate their economies to align their costs with more successful countries. The only alternative would be for creditor countries to accept higher inflation to accommodate the weaker members of the club.

    If the EU can’t agree it with its own members what chance the States versus China!

  • pippakin

    Mack

    Sorry, I must have ‘misremembered’ an article from last week.

    I still say CT will increase and that there is room for it to do so.

  • HeinzGuderian

    Where did it all go wrong ???

  • DC

    Financial innovation aka busted flush mathematics.

  • Alias

    Some little corporal had a grand plan to united Europe under totalitarian control and others caught on to the idea but decided to use other means toward the same goal…

  • Alias

    “All taxes will increase. The sad, mad thing is that the government is still saying CT is safe.”

    Can it really be that Pippy finally says something sensible?

    The idea that the taxpayers are going to allow their income taxes and indirect taxes to be doubled and their benefits to be cut in order to bail-out corporations while corporations don’t pay toward the cost via tax increases is pure nonsense. Apart from that, income taxes alone won’t cover the cost of bailing-out the eurosystem.

    All the EU had to do to remove Ireland’s low corporate tax policy was to engineer the conditions that would make it politically, economically, and even morally impossible for Ireland to maintain it. Any other conditions are superfluous and counterproductive. That way the EU allows the muppets to claim that their tax sovereignty is unaltered by EU shenanigans but the EU gets the result it always wanted.

  • Brian Walker

    Pete, I ran a hedge ” seems ” and “if confirmed”. We are in uncharted territory here but I cannot imagine any government wishing to stay in office even a a holding operation or another government wishing to take over if CT is significantly raised..

  • Pete Baker

    You did indeed, Brian. And anyone following the link will see that.

    And, fundamentally, I think you’re not wrong – in that it’s certainly the impression FF are desperate to get out there.

    But my point, such as it is in that opening sentence, is that it’s far too early to say what will emerge from these negotiations.

    I doubt there will be any announcement soon of a rise in CT… but it may well follow as a consequence.