Irish defend corporation tax rate

Mary Coughlan said there would be no change to the tax rate

The Irish government has insisted it will not raise the country’s low corporation tax rate in return for a European Union-led bail-out.

Deputy Prime Minister Mary Coughlan said the 12.5% rate – much lower than the EU average – was “non-negotiable”.

Her comments come as speculation grows that France and Germany want the Irish Republic to raise the tax in return for aid.

The Irish government admitted on Thursday that it needed outside help.

Finance Minister Brian Lenihan said he felt “no sense of shame” over the country’s economic record, but that it now needed outside help.

Previously the government had said it did not need any financial support from the European Union and International Monetary Fund (IMF).

The Republic’s low corporation tax has been criticised by other EU nations, who argue that it gives the country too much of an advantage in attracting overseas investment.

They now argue that the Republic should not be allowed to solely rely on a bail-out, and that it should instead raise the tax rate to help boost government funds.

The Financial Times on Friday reported a French official describing it as “almost predatory”.

However, the Republic’s European Minister Dick Roche, also insisted that the corporation tax rate was “certainly not up for negotiation”.

He told the BBC: “There has been some very unhelpful chatter in the background in the last few days about our corporation profit tax.

“Where would be the sense of destroying one of the great drivers of growth?”

EU, European Central Bank, and IMF officials arrived in Dublin on Thursday to discuss the country’s debt crisis, and what aid the country required.

The Republic’s Central Bank Governor, Patrick Honohan, said he expected a loan in the region of “tens of billions” of euros.

Mr Lenihan said the country’s problem were caused by its heavily indebted banks, which the government has had to bail-out to the cost of 45bn euros (£39bn; $60.1bn).

“The big difficulty of course is that the banks grew to such a size that they became too unmanageable for the state itself, that’s the big difficulty here,” he said.

“And that’s why we have to consider external assistance to stabilise our banking system.”

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.