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.