Ireland is to face renewed pressure from the EU's socialist-led governments to raise its corporation tax rate into line with the higher rates prevailing throughout the rest of the EU.
Meanwhile, however, Irish officials confirmed that they do not expect any significant criticism of Ireland in a special EU working party's report on harmful tax competition due to be published next week.
Yesterday Germany's new Finance Minister, Mr Oscar Lafontaine, told journalists that progress on tax co-ordination would be a priority of the forthcoming German EU presidency.
And on Sunday night the EU's Socialist Finance Ministers, meeting ahead of yesterday's Finance Council (Ecofin), spent their time discussing a paper on tax "co-ordination" calling, among other things, for a minimum EU corporation tax rate.
Although the paper, by the Belgian Socialist leader, Mr Philipe Busquin, was sent back for redrafting, sources say that its thrust received broad support with only the British, Irish and Dutch expressing opposition.
Yesterday the Minister for Finance, Mr McCreevy, and the British Chancellor, Mr Gordon Brown, insisted that tax policy is and will remain a national competence and that both are prepared to veto any EU move towards harmonisation.
The Irish Labour Party representative at the Socialist meeting, Mr Derek McDowell TD, also stressed that the document was "impossible to accept in its present form".
Mr McDowell made clear that the party supported the agreement reached between the Government and the Commission for a 2003 convergence on a 12.5 per cent common corporation tax rate.
Yet the Irish veto may not stop collateral damage to Irish interests arising from the row. Mr Lafontaine made a clear link with structural funding in complaining about net recipients of EU funds who were in effect tax oases - "that does not conform with EU solidarity," he said.
Mr McCreevy said he was not worried by the reopening of the debate. Ireland had a deal with the Commission which it would defend, he said. The Irish experience, he said, was that the reduction in corporation rates would actually increase tax yields, a lesson that others could learn.
"I don't believe that we will move to tax harmonisation in my lifetime," he said, insisting that it would effectively mean an unacceptable move to a single political ideology for the whole of Europe.
The Busquin paper argues that the last few decades have seen a shift from taxation of companies to that of labour, a process that needs to be reversed.
And it argues that tax competition will sap at member states' revenue raising ability and therefore at their ability to support important social programmes. "The European Welfare State needs a sound financial basis," the report says.
