Proposals issued today by the European Commission for a European Union wide Common Consolidated Corporation Tax Base (CCCTB) have not proven that Ireland will benefit from the introduction of such a scheme according to Cllr David Grant, Cathaoirleach Bray Town Council.
After ten years in the melting pot CCCTB proposals have been published by the European Commission setting out in detail how the system would operate throughout the European Union. The Commission claim that the new way of making tax returns will reduce the administrative burdens on companies operating in more than one member state, that compliance costs will be lowered and that legal uncertainties would be eliminated.
The proposals that would introduce an optional new method of paying corporation tax comes at a time when corporation tax rates in the European Union are at record low levels with some countries continuing to cut their rates to improve their local economies. Recognising the difficulties that companies have at present no country has sought to increase their corporation tax rates in recent years.
The new rules, if implemented, could result in lower corporate tax revenue leading to higher tax rates on other revenue streams in Ireland. In addition Ireland’s ability to attract Foreign Direct Investment would be limited; also as the amount of labour becomes a criteria for calculating the local tax payable the levels of employment in Ireland could be affected and consequently both these factors could affect the quick return to high levels of economic growth that are needed here.
“Policies that have made Ireland a competitive and attractive location to do business could be undermined by these proposals. The benefits to Ireland of such a scheme need to be spelt out and the case made why Ireland should sign up.
Protecting Ireland’s corporation tax base is just as important as ensuring that Ireland’s 12.5% corporation tax rate is maintained. There is no point in being able to set a rate if the basis for its calculation is determined elsewhere, this reduces the country’s fiscal powers to that of a local authority.
If such a proposal were to be implemented it would result in significant distortions in the level of income derived from corporation tax paid in Ireland with the consequence that other areas would bear greater taxes or that government spending would have to reduce further” said Cllr Grant.