Ireland corporate tax 'part of bailout talks': Germany

22nd November 2010, Comments 0 comments

Germany said Monday that Ireland's low rate of corporation tax would be among the points under negotiation for an EU bailout package, apparently contradicting earlier statements from Dublin.

"The German government will not be making proposals" regarding potential reforms to be put in place for the up to 90-billion-euro (123-billion-dollar) package, spokesman Steffen Seibert told a regular news conference.

"But it is clear that corporation tax should be one point among others when one considers how to increase the 'receipts' part of the budget," Seibert said.

Ireland's Prime Minister Brian Cowen had stressed on Sunday that calls from other eurozone countries to raise Ireland's controversial 12.5 percent corporation tax had "not arisen" in negotiations.

Seibert added that Dublin had to focus not just on reducing expenditure but also raising more money for its budget.

Debt-wracked Dublin agreed on Sunday to ask the EU and IMF for a bailout, making Ireland the second eurozone country to be rescued this year since Greece in May.

Germany's top-selling newspaper Bild, which had railed against the Greek rescue with reports about profligate government spending, called Irish policies a "scandal".

"First the country steals jobs and tax revenue from other countries with its extremely low taxes, and now the other countries have to pay up for the second time to prevent its banks from collapse," it said in an editorial.

Earlier Monday, Germany's Deputy Foreign Minister Werner Hoyer said that the package could calm markets but added that EU leaders urgently needed to negotiate the terms of a permanent safety net to protect the euro.

"The umbrella has been deployed, this shows how important it was to have it," Hoyer told reporters ahead of a meeting of European Union foreign ministers in Brussels.

"It is even more important that we start on a permanent mechanism in Europe during the European summit in December," he said.

Hoyer said he was optimistic that the billions of euros (dollars) available to Ireland "can help to reassure the markets" and give Dublin the "psychological umbrella" needed.

Seibert reiterated Berlin's desire to have private investors contribute to the costs of any future bailout after the mechanism set up in the wake of the Greek crisis expires in 2013.

"The justification for this reasoning is now being amply demonstrated," Seibert said.

© 2010 AFP

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