Leo Varadkar needs to stand up to the Franco-German axis for Ireland and the small nations of the European Union

Since it became clear that Angela Merkel would be re-elected as German Chancellor, there has been a re-focused approach to tax harmonisation within the European Union, driven mostly by Emmanuel Macron’s France, along with Germany. This has been covered by numerous media outlets and there is little I can add to the conversation. The argument is that France and Germany who are now both stable and revitalised after momentous national elections, will look to readjust the balance of Europe. It was a major talking point a few years ago and then seemed to die down with numerous crises occurring, like the EU sovereign debt crisis, followed by Brexit.

In fact, it looked like Brexit would deter these efforts for a number of years at the very least. However, the certainty of the EU position in the face of a disorganized and often contradictory UK position has probably alleviated some of the fear in Brussels that the EU will suffer more than the UK from Brexit. The buoyant economic situation across Europe has also added to this new-found sense of confidence. This is a welcome change from the near fatalism that pervaded much of the mainstream media concerning the European Project over the last number of years. Unfortunately for Ireland, this has exacerbated the return to the tackling the major thorn at the side of the two most powerful EU economies; the variance in corporation tax that has attracted a disproportionate amount of foreign direct investment to certain peripheral EU states.

Ireland is undoubtedly the most high-profile example of a country benefiting from a lower than average corporate tax rate in the EU. It isn’t the only nation though, with some of the so called peripheral nations also attracting companies in this way. These include Cyprus and Malta amongst others. Many of these have suffered in the past from poverty, emigration and elevated levels of unemployment, A story all too familiar to many of our own older generations. The access to the European Union has offered these countries the chance to invigorate their economies, some experiencing growth unheard of in the recent past.

Unfortunately for the small nations, now that Germany and France (with the support of some of the other large nations) have realised that the rules are not in their favour they have decided that they want to play a different game. The latest utterings coming from Paris and Berlin are that the Eurozone needs a finance minister, along with a uniform corporate tax rate.

The Irish government needs to be firm and stand up for itself here, along with the other smaller nations. Allegedly, we have a lot of goodwill over the unique challenges we face with Brexit. Surely, we can argue, this is not the time for such drastic changes to the daily functions of the EU. Furthermore, these actions would boost the dissenters against the European Union’s creeping power. Many of these protestors have fuelled far right movements in European countries in recent years.

Ireland needs to say this isn’t the time and tell Europe that they will use any veto powers available to them to block this. Ireland can then work with the other nations who are more discreetly opposed to a single tax rate to organise a bloc of countries. Ireland is one of the most pro-European nations. Varadkar will need to effectively vocalise that there is difference between being Eurosceptic and believing that these potential steps are a bridge too far.

A lot of Varadkar’s appeal to his supports revolves around his frank and outspoken method of communicating.  He is seen as someone who isn’t afraid to mince his words. This is often seen in sharp contrast to his predecessor, Enda Kenny. It’s hard to forget the image of Nicolas Sarkozy rubbing his head, this was not the action of someone speaking to their equal.

Varadkar has been a lot more forthright with his criticism of the British government for their approach thus far to Brexit. It would be a lot more of a challenge to be as outspoken against tax harmonisation. However, this does not mean it would be prudent to stay silent. Ireland needs to stay strong on this issue. We cannot back down and allow ourselves to be walked over and dismissed. Let’s hope we have a leader who will fight for Ireland and maybe we can be an inspiration for other nations struggling to find their voice in Brussels.

 

, , ,

  • runnymede

    Ireland is just going to have to get used to being pushed around I’m afraid, that’s how it works. And it will happen more once they don’t have the UK to help them fight their corner on some of these issues.

  • Conchúr

    The FDP will shoot down any tax harmonization proposals from Macron. Ireland doesn’t really have to do anything.

  • Ben De Hellenbacque

    Tax harmonisation, encouraged by Corporate Directors, is another demonstration of the inherent dichotomy within the EU: greater co-operation between member states while also having to allow competing economic interests between same member states.
    Whether its hidden goal is to achieve greater integration within the Union or not isn’t my point. The point is there is an inevitable tension between the Franco German axis and the (let’s call a spade a shovel) the bit players. At the same time some of the bit players enjoy a tax haven status that is unfair to other member states and effectively gives wealthy multinationals extended tax holidays. The EU is not yet a fair and level playing field and those imbalances will be exploited by multinationals.
    From what I understand, the Lisbon Treaty guarantees tax policy as one of national competence so maybe Varadkar can argue for a new Treaty (to protect his FDI planted fat cats).

  • the rich get richer

    As Connor McGregor would say….

    “ You’ll Do Nothing “ ‘You’ve got Nothing “ ‘ You’ll do nothing “

  • Kevin Breslin

    I think Brexit UK is going to have to get used to being pushed around, it can no longer coerce, influence or control the behaviour of its neighbours the way it used to.

    I really think this silly Commonwealth axis dream of an obvious Eurosceptic, Cyprus, Malta and Ireland ignores the taxation nature of the European Union as a whole.

    Luxembourg, Belgium, Greece, Netherlands, Austria, Denmark and Germany have low taxation policies.

    France, Italy, Spain, Sweden, Poland have relatively high taxation policies.

    This Franco-German axis thing is a British manufactured nonsense.

    A healthy equilibrium will be achieved in the EU, while the UK is still struggling with the Irish border and having numerous disputes about how many powers should be devolved to the regions between Westminster and Stormont, Holyrood, Cardiff and maybe even the LGA.

    The Irish aren’t standing alone, the British are standing alone with Brexit and their nation is divided over it.

  • Kevin Breslin

    “Co-operation between member states while also having to allow competing economic interests between same member states.”

    That’s not a dichotomy, in order to have commercial competition you need common rules and constraints to that competition.

    It’s like trying to have a football match and deciding you should be referee, eventually no one is going to play with you.

  • Reader

    Kevin Breslin: That’s not a dichotomy, in order to have commercial competition you need common rules and constraints to that competition.
    So, do you think that the fringe and the core need to have the same corporation tax rate?

  • Cathal Geeney

    interesting

  • james

    I think both France and Germany, and particularly the latter, will both have more pressing problems to deal with in the form of the inevitable fallout of Merkel’s quite disasterous open doors immigration policies. That is what has “fuelled far right movements in European countries in recent years.”

    And it is far, far from simply a ‘far right’ (whatever that means) fringe. Much of the protest comes from ordinary middle-of-the-road folks who have seen the ghettoization of cities because of Merkel’s quite extraordinarily stupid policies.

    So I doubt if Ireland is really much of a priority for the powers that be in Europe.

  • james

    Perhaps he should have uttered those same sobering words to himself before embarassing himself against Mayweather.

  • Neiltoo

    The end point of the EU is the United States of Europe and if you haven’t realised that yet then you haven’t been listening. If you think that an EU finance minister will cause problems just wait till the EU defence minister is appointed.

  • Kevin Breslin

    I think having the similar corporation tax rules is enough in the spirit of free and fair competition (like the Azores Ruling), not necessarily having a common rate.
    {Even the UK Brexiteers get giddy about the protection of “run of the mill” WTO rules as a foundation.}

    Unity in Diversity in all that.

    France can’t complain about higher corporation tax if it feeds more public services at the taxpayer’s expense leaving them with less money in hand, Ireland cannot complain if its lower corporation tax doesn’t bring in enough for public services but leaving their taxpayers more in hand.

    There will still be fringe and core nations, and there will be fringe and core regions of those nations. Things can change however. Northern Ireland used to be prosperous and Gdansk used to impoverished, now Gdansk has overtaken it, and probably will surge past with Brexit more logistically designed for a Global Britain than a Global UK.

    As I said before a healthy equilibrium will be reached.

  • runnymede

    Meanwhile Varadkar denies the Catalans a right to separation while his government continues to push for a region of a neighbouring country to secede and join his country.

  • Brian Kann

    Define ‘continues to push”?

  • Brian Kann

    This is one of these ones where we need to wait and see concrete proposals rather than newspaper speculation. I can’t see this being agreed pan-EU and because Germany and France want it, doesn’t mean it will be implemented. It most likely would constitute interfering with something that is the exclusive competence of the Member States, and would therefore violate the fundamental; principle of subsidiary on which membership is based. As such, it would likely need treaty change and referendums in many countries – politically, this would be a disaster for the EU and not worth pursuing. Despite what the British press thinks, one of the advantages of the EU is each Member State has veto rights over certain ideas. This is all it is at present: the English press seem to want it to be true as much as anything…

  • Trasna

    Actually, Ireland the UK have disagreed more often in the EU than agreed. Ireland is actual closer to France exp with CAP.

  • Trasna

    Come into my web said the spider. Leo and FG are allergic to NI and everyone within.

  • Salmondnet

    “The Irish aren’t standing alone, the British are standing alone with Brexit and their nation is divided over it.”
    Misdirection and wishful thinking won’t answer. Britain’s problems (if any) won’t solve Ireland’s and Ireland’s are just starting. Good luck. You are going to need it.

  • the rich get richer

    Well if you can get paid that much for not fighting then you be foolish not to take it .
    I think I’d call that ‘ fight ‘ a dance of convenience .

  • runnymede

    ‘because Germany and France want it, doesn’t mean it will be implemented’

    It does now, as the UK won’t be there to stop it

  • Oggins

    Don’t think that is how the EU voting system works.

  • Oggins

    Leo has as much interest in NI as the Tories who walked out of the SOS speach today.

    They all talk the talk, but give one hoot about us.

  • Brian Kann

    But in the Brexit debate, things were being constantly forced on the UK against its wishes. Which one is it then?

  • Kevin Breslin

    https://www.rte.ie/news/business/2017/1002/909041-indeed-financial-jobs-search/

    You’re right, we’re going to need homes for all those highly paid British refugees to buy.

  • Kevin Breslin

    And we agree with Germans on things like taxing banker’s bonuses if they are over their annual salary, indeed everyone but the Brits did. We also don’t mind German regulations as much as the Brits do.

    Germany also gets the partition thing better than Britain does unsurprisingly, maybe Scotland needs to breakaway for the empathy to begin.

  • Kevin Breslin

    That’s like me saying the end point of Brexit is a giant wall around the South East coast of England. 🙂

  • Kevin Breslin

    Ireland coming out on top means that the rest of the EU has agreed to toe the Irish line. Kind of how diplomacy works, you win some, you lose some.

    Just like Eurovision.

  • Kevin Breslin

    Oi Big Ed, don’t you know UK is a lot smaller than Portugal, Spain, Poland, Italy, Sweden, Finland, Austria, Denmark, Luxembourg, Belguim, the Netherlands, Malta, Cyprus, Greece, Slovakia, Slovenia, Croatia, Hungary, Czech Republic, Estonia, Latvia, Lithuania, Bulgaria, Romania and the Republic of Ireland combined?

    I think that’s quite ironic when the UK is going to be the junior partner in trade deals with:

    The United States (if any can be agreed)
    The European Union (if any can be agreed)
    China (if any can be agreed)
    India (if any can be agreed)
    Russia (if any can be agreed)
    Mercursor (if any can be agreed)
    Japan (if any can be agreed)
    ANSEAN (if any can be agreed)
    Brazil (if any can be agreed)
    Canada (if any can be agreed)

  • Kevin Breslin

    Erm Catalonya should be asking the United Nations for the right to separation.

    Ireland recognises Palestine and Kosovo but neither are sovereign states in the eyes of the UN

  • Kevin Breslin

    Austin Currie and John Cushnahan would have disagreed with that Trasna!

  • Neiltoo

    No, it really isn’t.

  • james

    Oh, indeed – and fair play to him if people are stupid enough to pay for it.

    It’s not his fault – he’s just not a boxer.

  • Damien Mullan

    The optics of unequivocal opposition to the proposals being muted by Macron, need to be fleshed out to elicit the extent of the ambitions being proposed. Macron has proposed, thus in the optics game, Ireland needs to counter propose. Varadkar needs to say, ‘yes, let us explore tax harmonization, but let us also and in parallel, explore a transfer union, as this would only be right and proper.’ This proposal would be made in the sure knowledge that the Germans will not wish to indulge such an initiative. Macron’s vision must be expanded into its full bloom, Ireland should not allow him to parse his vision towards initiatives that favour the larger member states, if tax harmonization is good enough now for this renewed EU, then so is a transfer union, after all, the United States operates a common federal corporate tax rate, though the states compete at state taxes level, they all nonetheless share in a transfer union. That should be made the condition of Irish acquiescence in exploring these proposals.

    Tis better to see if killing with kindness really can be achieved. A Bismarckian strategy is whats need.

  • Damien Mullan

    The same nonsense was spouted when the office of the President of the European Council was created, as well as the office of High Representative of the European Union for Foreign Affairs and Security Policy.

    The sky doesn’t appear to have fallen in. And Irish regiments are still stationed in their bases or on UN duties.

  • Damien Mullan

    I vote for the SDLP primarily because they are a Nationalist party and want to ultimately break the Union. It doesn’t take Leo Varadkar to ‘push’ for anything, to get 43% of the voting electorate in NI to cast their first preferences for Nationalist parties that advocate for the Union’s demise.

  • Oggins

    Transfer union? As a percentage of the overall pot?

  • Get The Grade Get The Grade

    Fantasy Island.

  • Damien Mullan

    Well is that not the suggestion as regards tax harmonization, for in this instance, the Irish Revenue to collect the tax and it to be transfer into an EU treasury to then be allocated to EU member states as a proportion of the revenues of sales generated within various member states. Now Ireland ,and other EU tax authorities, will have to be compensated for the additional workload, so that will have to be factored in as a form of rebate. Then the issue of fiscal transfers can be debated depending on what socio-economic metrics are used to apportion those funds. The US does it through the federal budget, many poorer mid-western states being net beneficiaries, while largely coastal states are by and large net contributors.

  • Accountant

    Why have you decided to attack the UK ? UK has decided the EU doesn’t work for it.

    But the question posed is Ireland’s place in an EU that will be more Franco-German dominated in the future. The challenge is how to reform/shape EU to ensure that it continues to work for Ireland.

    I didn’t see UK mentioned in the question.

  • Accountant

    The UK will have trade deals with all of the above countries/trading blocks within 5 years of departing the EU.

    They are very unlikely to be comprehensive or anywhere near optimal, but some, e.g. with Canada will be very close to the EU’s deal with that country.

    The UK has no option but to strike these deals. Over time, most of the deals the UK secures will be better for it than the EU deals were for UK.

    The deal that will take longest to get to a better place for either party will be the UK-EU deal, unless Merkel forms a strong coalition.

  • Accountant

    So why is Juncker setting out his stall for universal adoption of euro, appointment of a finance minister, an EU army, harmonised taxes, etc. ?

    The integrationalists may not be able (or even want) to steamroller the devolvers, but there will be special goodies for well-behaved (inner circle) members, e.g. European Medicines Agency, etc.

  • Kevin Breslin

    Pardon, avez-vous peur d’un peu de diversité?
    Oder sind Sie eifersüchtig auf Deutschland?
    An bhfuil eagla ort ag foghlaim?

    I think the United Kingdom may need to reform from being Poundland plus to deal with the world around it.

  • Kevin Breslin

    I feel sorry for your nation if people believe this is a widespread dogma around what is going on in the Whitehall and the cabinet.

    The Government negotiations in Germany will have no impact on the UK-EU deal if there ever is to be one.

    And I should also point out that those deals with Canada, Japan, Korea that were copy and paste versions of what the European Union have are completely invalid if there’s no UK-EU deal.

    They want their single market efficiency, not jingo juice and dreams of empire … these nations mean business, they aren’t tourists at the British Museum.

  • Stifler’s Mom

    “stand up to the Franco-German axis” ? Are you kidding? Ireland and all the other countries still in the EU are going to be forced to hand over all sovereignty to the EU asap. Didn’t you hear Junkers speech a few weeks ago?

  • Stifler’s Mom

    “greater co-operation between member states ” is doublespeak for member states obeying what they are told to do by the German rulers of the EU.
    There is no chance of any new treaties coming from non ruling countries of the EU. Its a one way street.

  • Stifler’s Mom

    Most likely the tool of just ignoring what Varadkar says and doing whatever they want.

  • Stifler’s Mom

    The EU army is intended to be commanded centrally by the EU. That is the plan. Remember only a year ago people laughed that the idea of an EU army was made up. Now its real and is going ahead.

  • William Kinmont

    For most remainers I think? the economic arguments on trade were just a. Convenient point to make. The attachment to the EU was more about seeing the EU as a protector of social liberties and freedoms the concept of free trade and free movement being attached to an ideal of equality across Europe. This was what my heart said if not completely my head.
    The burocracy in Brussels with its self reinforcing federalist aims is heading further away from this concept. .
    I hope that if the move to federalisation, establishment of an EU army etc comes to pass whoever is in power in Dublin gives the people a free hand to veto it.
    Will citizens in the North still have some role in this? Will we still be in the EU to sufficient a degree to have a vote?

  • Oggins

    Have you any links to these special goodies? Or is this your something you believe will happen? Where is your source?

    Yeah they are proposing greater integration. Not sure my opinion on this. I really need to do more reading.

    My point was that in relation to the commenter that the EU voting system doesn’t work the way he was describing

  • Accountant

    No links – my opinions – but the UK’s EU institutions are being re-allocated and I assume the relocation choices will not be entirely objective.

    I agree with your observation that the EU voting system does not allow France and Germany to steamroll their positions through, but, given that Germany alone will contribute nearly 50% of the post-Brexit EU budget, one also has to be realistic.

  • Accountant

    These UK trade deals will absolutely be closed within 5 years.

    I’m not boasting about the UK’s prowess in good, fast deal-making. The UK-US deal will be a disaster for the UK. Most deals will be superceded and deepened over the following 10 years.

    But UK absolutely needs short term deals on non-WTO terms.

    I’m just pointing out the obvious – there will be multiple bilateral UK international trade deals.

  • Oggins

    Assume…
    50% based on which report?
    Contribution doesn’t define a percentage of vote. If it was this the UK would of had a bigger say and could of changed the EU more?

  • Accountant

    For the 50%, look over my old posts (I don’t know how to) – I linked to the net contributions data about a month ago.

    The modern world makes most of its decisions based on assumptions and skewed facts.

    I think my assumption that he who pays calls more than 1/27 of the tunes is a reasonable assumption.

  • Jim Jetson

    So it’s lucky you Brits got out “just in time”…eh? 😉

    Oh never mind that survey that came out today showing the UK construction sector shrinking…

  • Oggins

    Hmm not being funny, but not going to go through your old posts. If you are going to specify something factually, you should back it up, instead of read through my back catalogue.

    Assumption but not fact. So how does the EU vote? So going back to my point previous. On this basis, the UK court of made bigger changes to the EU, due to their contribution. But they couldn’t because of the voting structures.

    An assumption is something accepted as true without fact. The fact is that the EU don’t vote this way, and you know this. So it’s something maybe you want to happen? So unless there is a plan to change the voting mechanism soon, it can’t happen as you described.

  • Stifler’s Mom

    Do you mean the report that showed a decline in construction LAST MONTH ? 🙂 The one reported in the failing globalist propaganda lefty leaflet called “The Guardian” ? Did you miss the way they tried to spin one month showing decline, as some terrible result of brexit? Despite same failing newspaper reporting earlier in the year about construction sector increases?

    https://www.theguardian.com/business/2017/jan/04/uk-construction-industry-growth-new-orders

    https://www.theguardian.com/business/live/2017/oct/03/stock-markets-record-highs-uk-construction-data-business-live

  • Kevin Breslin
  • Kevin Breslin

    “These UK trade deals will absolutely be closed within 5 years.”

    “I’m not boasting about the UK’s prowess in good, fast deal-making.”

    Which one is it?

  • Accountant

    Fast-ish, pragmatic, essential, limited deals – e.g. whisky vs electronic components.

  • Kevin Breslin

    I hate to quote Satre here but the Brexit philosophy seems to be
    “L’enfer, c’est les autres”

    https://uploads.disquscdn.com/images/6acf25be24a20219b6c6ad1089ec36cd0c12775e96e2a87370c758f82b693824.png

  • Neiltoo

    That’s quite funny; but it hardly proves your comparison is justified 😉

  • Kevin Breslin

    Have you any proof your comparison is justified?

  • Neiltoo

    I didn’t make a comparison, I just stated that the end point of the EU is the United States of Europe.

  • Kevin Breslin

    Hardly, if it was the 28 member states would’ve voted to federalise already.

    The Goal of the EU is in my opinion that the smallest continent on Earth builds a common market to develop within.

    https://uploads.disquscdn.com/images/44ec854221922a18ed27d9ee971cadd20c26e26acefd59a1dd47d60d4ef0f0f4.jpg

    That is all.

  • Neiltoo

    Yup, a common market is what the UK joined. If you think that that is what the EU is now, then there is no point in my saying anything else.

  • Kevin Breslin

    Don’t say anything else then, don’t write anything else then.

  • Damien Mullan

    “The EU army is intended to be commanded centrally by the EU”

    How did that central command work out at the Curragh in 1914.

  • Stifler’s Mom

    Not too well. But Ireland these days has fully submitted to rule by the EU. They are so submissive that they even accept re running referendums until the result that the EU wants is achieved 🙂

  • A Bit Left and a Bit Lost

    I apologize if there is a paywall behind this (I don’t pay but I’m signed up) but this is a good example of the type of article I see increasing. There is definitely a renewed focus on a pan European corporate tax…

    https://www.ft.com/content/8cdba452-a779-11e7-ab55-27219df83c97

  • Sean Danaher

    Damian
    I largely agree but would like to add something.
    There seem to be two EUs a mythical demon fabricated by the right wing of the Tory party and the right wing Tory press and the real EU. The fact that “This has been covered by numerous media outlets …” matters little if the quality of the coverage is tainted by anodyne anti-EU propaganda.

    I would recommend a more grown up discussion here on the Irish Economy Blog (It can be a bit technical but worth following) http://www.irisheconomy.ie/index.php/2017/09/30/europe-ireland-and-taxes/

    Here is the introduction

    “The recent German election reminded us that we should never get too
    excited when a European Commission President, or even a French
    President, makes a speech about the future of Europe. Ultimately, that
    future will depend on the decisions of 27 democratically elected
    governments, including our own, and that will probably continue to slow
    moves towards deeper integration.

    Nonetheless, here are some scattered thoughts on the tax issue, since
    it is in the news these days. The good news is that Ireland doesn’t
    have to do anything on taxes that it doesn’t want to. On the other
    hand, it might be prudent for us to have more to say on the issue than
    “No, no, no”. If we don’t get pro-actively involved in these (and other)
    debates, we can hardly blame others for setting the political agenda.

    I take it that the core Irish interest is maintaining the right to
    set our own corporate profits tax rate (and other internal taxes,
    perhaps, such as labour taxes). If so, then as others have said, it
    surely makes sense to focus on that core interest and not facilitate
    schemes that help companies pay less than that — and the good news is
    that we have been moving in this direction in recent years, notably via
    the OECD, something that is not sufficiently appreciated by the foreign
    press.”

  • Old Mortality

    ‘This Franco-German axis thing is a British manufactured nonsense.’
    You should try to read the European press a bit more. You might find it to be French-manufactured nonsense.

  • Kevin Breslin

    Everyone liebt the Germans these Tage.

  • SeaanUiNeill

    Just over 50% of the UK has decided that the EU does not work for it, and even then this would need some unpacking as for every voter who was tired of open borders and willing to crash out of the EU, there were others who were looking for a Norway solution, so the “one voice” theory is always going to be a hard sell on any sane person who looks at the small print automatically like myself.

    Even simplified down to the 52-48% split we are still looking as political schizophrenia rather than some unified decision. And when we look at NI, almost 56% of us were with the 48% part of the UK total. We said Remain, which should not simply be dismissed. I don’t think this is so much an attack on the UK as a recognition that the exiteers claim that they are the entire voice of the UK is suspect to anyone who can count past ten. This is not such an overwhelming majority that it can be somehow equated with the will of the whole community.

  • SeaanUiNeill

    Only necessary because they have not misinformed their public professionally enough the first time to get the correct vote, unlike the Exit lobby in the UK…….

  • Stifler’s Mom

    Sorry but you’re living in cloud cuckoo land if you think the EU is governed by 27 member states. It’s run by an unelected council controlled by the elites. That’s why everyone wants out and is rebelling against this tyranny.