FINE GAEL has been accused of whipping up jingoistic and entirely unfounded anti-European sentiment in its response to the European Commission proposals for budget co-ordination across the member states.
Minister for Finance Brian Lenihan last night described the Fine Gael reaction to the proposals as “reprehensible” at a time of such financial difficulty for the union.
The Fine Gael deputy leader and finance spokesman Richard Bruton maintained earlier that the proposals would give the commission a final veto over Irish budgets and could jeopardise Ireland’s low rate of corporation tax. Mr Lenihan strongly disputed the claims and said they were simply wrong.
“As Deputy Bruton knows well, the commission discussion document issued does not even mention tax harmonisation,” said Mr Lenihan.
EU finance ministers will discuss the commission’s proposals, set out yesterday in an 11-page communication, at their regular meeting next Monday.
The commission is seeking to compel the 16 euro states to submit draft budgets to Brussels before they are presented in parliament. The plan sets out to tackle excessive government debt by strengthening the Stability and Growth Pact, which governs how the euro zone functions.
Mr Lenihan said there was nothing in the Lisbon Treaty that diminished Irish sovereignty in fiscal matters and a protocol confirming this position had been secured in advance of the second Lisbon referendum.
“To suggest, as [Mr Bruton] does in his statement, that our corporation tax rate is threatened by proposals is highly irresponsible and certainly not in the interests of this economy which depends so much on foreign direct investment.”
The Minister repeated the commitment given in his last budget speech that the 12.5 per cent corporation tax rate would not change.
He said that greater co-ordination of economic policies was envisaged in article 136 of the Lisbon Treaty as all 16 euro zone members were deeply intertwined through the common currency.
“As we have seen over the past few weeks, a speculative attack on one member state affects us all. For that reason, we have a shared interest in enhanced economic co-ordination throughout the zone.”
Mr Lenihan said the proposals unveiled yesterday would be referred to the taskforce set up by European Council president Herman Van Rompuy, of which he was a member.
“It is disturbing that Fine Gael, in pursuit of its own narrow political purposes, would seek deliberately to pander to a jingoistic, anti-European line of argument worthy of the far reaches of Euroscepticism.”
He said it was a great disappointment to see the main Opposition party departing from its traditionally proud pro-European stance. “Are there no holds that are barred in their relentless pursuit of power?” he asked.
Mr Bruton had earlier expressed Fine Gael’s opposition to the commission proposals and said he was astonished that Brian Cowen and Brian Lenihan seemed “willing to roll over and surrender crucial decision-making powers”. He said that having first allowed Ireland’s public finances to fall into a state of ruin, the Government was now on the point of ceding control over crucial financial decisions to other countries.
“This would be an extraordinary development. It seems that Fianna Fáil has made such a botch of the economy that it’s now happy for the European Commission to come in and clean up the mess.
“But this proposal could leave Ireland open to manipulation by larger competitor states on areas like our low corporation tax rate.”
He said he agreed that co-ordination and consultation with other euro zone member states was essential. However, ceding democratic control over the Irish finances to the European Commission and other countries was not an option.