MINISTER FOR Finance Michael Noonan has warned that he “will not be waltzed around by any member state” of the EU to increase corporation tax to get a reduction in interest rates on Ireland’s international loans.
He said there was “no way I will negotiate with anyone in the French government to concede anything on the Irish corporation tax rate” for a saving of about €200 million.
He believed the value of the reduction “is being exaggerated and in my view too much is being made of this”.
He also challenged Opposition parties about supporting the Government in working through the EU-IMF bailout package, when they questioned as “inconsistent” comments by the Taoiseach that the State was fully funded into 2014.
Sinn Féin finance spokesman Pearse Doherty said the State would have to go back to the market in 2013 “when we have no other choice”.
But the Minister told him: “If you want to scaremonger and frighten the children and talk about the bogeyman coming down the chimney in two years’ time, go right ahead and do it”.
He added: “You’ve a simple decision to be made. You can put your strength at the end of the rope and pull with us or you can stay with the knockers”.
Mr Noonan said it remained the Government’s intention to return to bond markets in the second half of 2012, if the yield on Irish debt fell below the interest rate on the aid package to Ireland.
But he said the Government faced “no urgency” to return to international debt markets because the State was funded into the second half of 2013.
During finance questions in the Dáil, Fianna Fáil spokesman on public expenditure Michael McGrath questioned the Minister about when Ireland could expect to get a reduction in its interest rate payments given that Mr Noonan had said a 1 per cent reduction would be worth €450 million a year in savings.
Mr Noonan said the State had the support for a rate reduction of the IMF, the European Commission, the OECD and 25 of the EU’s 27 member states, but there had to be unanimity.
“France has been very vocal in opposing the reduction and Germany is also opposed to the reduction, although it is less vocal.”
Claiming the value of the reduction was “exaggerated”, he said if Ireland got the same reduction as Portugal it would be worth €148 million a year and just over €200 million for the same reduction as Greece.
If “they want harder fiscal rules going forward, I am in favour of them and would be prepared to negotiate”, he said. “However, I will not be waltzed around by any member state, especially when the gain is so small in contrast to the potential industrial promotion.”
Earlier the Minister said the State would require about €30 billion in 2011, €23 billion in 2012 and €22.5 billion in 2013. He said in a more “benign” estimate of the figures they could carry on without further funding until the end of 2013 “but I want to be prudent” and give “the worst-case scenario”.
Mr Doherty said it undermines the State when the markets “see the Taoiseach bluffing” that “the State has the funding to meet all requirements until the end of 2013”. He asked what would happen when Ireland had “no other choice” but to go back to the markets in 2013, having paid €200 million in the past few days to unsecured bondholders in Anglo Irish Bank.
Mr Noonan said: “I prefer to try and encourage people to be a bit confident to get back to work, to all pull together in the interests of this country”.
He added: “You can keep knocking. You can keep talking it down as much as you like but what we’re going to do on this side of the House is to try and rescue the country”.
