TAOISEACH ENDA Kenny and Hungarian prime minister Viktor Orbán found common ground in their opposition to increased corporate taxation at a meeting in Government Buildings yesterday.
Both leaders are against any attempt to deprive EU member states of their right to set low corporate tax rates in an effort to attract foreign direct investment.
At a joint press conference with the Taoiseach after their meeting, Mr Orbán, whose government currently holds the presidency of the European Council said: “We did touch on the issue of tax competition within the European Union.
“Speaking with my Hungarian prime minister’s hat on, I made it clear that Hungary will always be for a low level of taxation. We would prefer not to have tax harmonisation in Europe. Low taxes generate competition and the European economy needs competition.”
The Taoiseach confirmed that he and the prime minister were in full agreement on the matter. Mr Kenny said: “The prime minister is a very strong proponent of lower tax rates and he understands exactly Ireland’s position here and has been supportive of us at many meetings in the past, at the European People’s Party and indeed at heads of government level.”
The Taoiseach congratulated the prime minister and his government for their “first-class” conduct of the European presidency.
In an address earlier to the Institute of International and European Affairs (IIEA), Mr Orbán also expressed his opposition to the current initial steps towards tax harmonisation in the EU.
“The Hungarian government’s conviction is we need tax competition inside the EU. Without tax competition, those countries who are less developed cannot catch up,” he said.
In addition, he said, the harmonisation of corporate taxes would make the EU a less attractive destination for investment.
Explaining how Hungary had ended its dependence on the International Monetary Fund (IMF) and returned to the financial markets, Mr Orbán said: “Unfortunately, we cannot compare the situation here in Ireland with the Hungarian situation, because the shape of the real economy is totally different here than in Hungary. The real economy in Ireland is very strong.”
He added: “I introduced horrible things in Hungary: bank taxation, some special taxations for various sectors of industry, etc.”
But these measures gave him “room to manoeuvre” and at that stage he decided to finish with the IMF and move back to the markets.
“The markets accepted us, which is very important,” he said.
The fact that his government had a two-thirds majority meant it could take the steps it considered necessary, he said.
He added that “strong political unity behind the government” was the main precondition get out of a crisis “especially when you are involved with the IMF”.
Presenting the prime minister with a copy of Sinn Féin founder Arthur Griffith's 1904 work The Resurrection of Hungary: A Parallel for Ireland, IIEA chairman Brendan Halligan said the prime minister's home country had inspired Irish nationalism.
