Ireland stands firm on corporation tax rate

Ireland will not abandon its low rate of corporation tax even if widely anticipated general elections trigger a change of government, according to former prime minister John Bruton.

Bruton, a senior figure in the opposition Fine Gael party, told last week’s ‘International Ireland: What’s the risk?’ conference in London that the republic’s 12.5% corporation tax rate was a “central plank” of its economic policy.

Ireland’s economic woes have led to calls from other EU states for it to raise its corporation tax rate, which has attracted insurers to locate in the republic.

Bruton pointed out that the level of Ireland’s corporation tax take, which is equivalent to 2.9% of the country’s GDP, is higher than the average for the EU. He added that, despite the recession, corporation tax revenues for 2010 were set to be E300m (£251m) higher than predicted.

“There is no real case for change and that is something that is accepted across the board politically,” he said. “It is counter-intuitive to change a policy that is enabling us to repay our debt. It is not a good policy for a lender or a borrower.”

He added that the government, which he led from 1994 to 1997, had kept corporation tax low even though it had included left-wing parties. The current Irish prime minister, Brian Cowen, has promised to hold an election early in the new year.