Is corporation tax north and south on the brink of harmonisation?

New Irish Finance Minister Michael Noonan’s pitch for more time to pay back the bailout at a steady predictable level seems to have hit deadlock over the sacred cow of  12.5 % corporation tax, the Irish Times’ Arthur Beesley reports.

Mr Noonan also said the Government was not for turning on the country’s corporate taxation rate, but French finance minister Christine Lagarde called for a “gesture” in return for lower bailout costs.

“Without that we won’t budge on the interest rate. I hope some progress will be made,” she said last night.


Fintan O’Toole has broken ranks to question  the “ fetish” of the Irish rate.

No one actually believes that a rise of a couple of percentage points in our 12.5 per cent corporate tax rate would create any serious problem for transnational companies operating here.

Moreover, having grasped these points, we need to qualify them in two important ways. The first is that French president Nicolas Sarkozy in particular is being staggeringly hypocritical. The effective rate of tax on corporate profits here (what companies actually pay as opposed to the theoretical rate) is almost 12 per cent. In France, it is 8.2 per cent.

Meanwhile speculation led by the unusual source of Andrew Neil in the BBC’s Poltiics Show suggests the UK government may at last allowNI a substantial cut from the UK level of 24%..  Despite the likely consequence of a cut to the block grant of public investment, might quite different pressures  result in a harmonised corporation tax rate north and south of the border?  


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