Emmanuel Macron, in the course of his successful election campaign, cited Irish corporate taxation policy as an issue which he believed that a refocused EU might address. This opinion is hardly startling, given Macron’s enthusiasm for rekindling the campaign for further EU integration.
When you consider the French electoral system, its shortcomings become apparent. Rather than having a single stage PR election in which a transferrable vote moves to stronger candidates after the elimination of weaker candidates, the French have evolved a system in which the candidates with the two highest votes square off against each other in one final head to head contest.
A somewhat bizarre scenario was very narrowly avoided in the recent French election. If the hard left Melenchon had received three more votes out of every 100 and Macron had received three less votes out of every 100, the final stage of the campaign would have given the French voters a head to head choice between a hard left and a hard right candidate, each of whom were strongly committed to pulling France out of the Euro and possibly out of the EU altogether.
Although in the end the French electorate decisively rejected Le Pen’s anti-EU platform and plumped for Macron, the strange feature of the first round was that Macron’s strongly pro- European support (23%) was roughly matched by each of the other candidates, Le Pen, Melenchon and Francois Fillon (each of whom had approximately 20% support and none of whom supported rekindled integration or federalism).
Macon’s victory, in these circumstances, was welcome for those, including myself, who favour the survival and development of the European Union. It was not, however, indicative of widespread support for integration or federalism among French voters. So while Brussels can breathe a genuine sigh of relief, the underlying state of French attitudes to integration in the European Union is simply not reflected in his 66:34 defeat of Le Pen.
In a startling article, Professor Brigid Laffan, Director of the Robert Schuman Centre for Advanced Studies at the European University Institute in Florence, argued this week that Ireland should now reconsider its corporate tax regime and its neutrality, described as “sacred cows”, for the sake of its EU future. She said: “A Macron presidency is very good news for the EU, but will challenge Ireland in terms of its domestic policy mix. In particular, it will bring renewed attention to the Republic’s corporate tax rate.”
She also stated that Ireland’s policy of “military neutrality”, which she described as “a second sacred cow”, needs attention.
Arguing that the return of “hard geopolitics in a world of Putin and Trump” challenges European security and means that Ireland’s neutrality “deserves sustained scrutiny”, she somehow queried the viability of Ireland’s remaining outside any EU defence. She argued that a vote of the Oireachtas should be sufficient to enable Ireland to abandon the triple-lock on participation by Irish troops in overseas operations sanctioned by the UN.
While we negotiated a right to opt out of EU defence recognised in EU Treaty law, Ireland has, by its own Constitution, gone one step further, and has provided at Article 29.4.4 that Ireland is prohibited from adopting any decision to establish a common defence under Article 42 of the Treaty on European Union where that common defence would include the State.
Accordingly, Irish participation in an EU common defence is prohibited by our Constitution and any change in that situation would entail the holding of a referendum.
The issue of Ireland’s military involvement with the European Union and a European common defence seems a very strange issue for Professor Laffan to raise in the present context. It is hard to see how the Irish Defence Forces could be pitted in any conflict with Putin or Trump.
Likewise, it is hard to see how Brexit in any real way increases the case for Ireland abandoning neutrality. NATO is still there. Perhaps some European federalists somehow feel that Ireland’s long-standing policy of neutrality makes us less than full blooded members of the European Union. But Sweden and Finland are not regarded as less than wholly committed to the European Union by reason of their neutrality.
Of course those who believe in the creation of a sovereign European Union super-state will always harbour an ambition that the EU should have a capacity to enter jointly into military conflicts with other member states on foot of a common “defence”.
It is disturbing that Ireland’s neutrality should be raised in this context at all. Given the relative size of our defence forces and our geographical location, there is simply no case for inviting the Irish people to abandon neutrality as part of some general movement towards EU integration. Only EU ideologues are concerned at our stance of neutrality.
Our corporate tax policy, and our capacity to determine it, is simply not a matter which should be described as a “sacred cow”. Conferring on larger member states of the EU a right by qualified majority voting to determine the corporate tax regime in Ireland would be an act of “economic suicide” as one member of the present Government has described it. Maintaining our corporate tax regime and autonomy is a vital national interest in Irish foreign policy. It is not some “sacred cow” in the sense of an obsolete commitment to an irrational proposition. Nor is there any reason for Ireland to “sacrifice” it at this challenging juncture when a post-Brexit Britain may well be contemplating adopting a similar approach to corporate taxation.
If the smaller and/or peripheral member states of the European Union surrender corporate tax competence to determination by QMV, they will, inevitably, be the losers to centripetal economic forces directed by the more powerful central states. It’s as simple as that.
We all remember at the height of the financial crash how Nicolas Sarkozy made a lunge at our corporate tax autonomy. The Irish state is currently challenging an attempt by the European Commission to whittle down corporate tax autonomy by resorting to Treaty provisions outlawing “State aids” as is happening in the Apple case.
But Professor Laffan’s unsubstantiated thesis that “Ireland may have to sacrifice sacred cows to survive Brexit” may best be seen as a not too subtle hint to those in Brussels who wish to force Ireland down the integrationist, federalist path of EU reform that the Brexit negotiations offer an opportunity to exact a price in the form of concessions from Ireland on these issues. Or at least that Ireland’s negotiators should be minded to “sacrifice” concessions on these issues to obtain the best possible Brexit package from Ireland’s point of view. The underlying mind set of such commentary is deeply puzzling.
One can only hope that the Government sees the absence of logic and force in such commentary for what it is. The last authoritative Irish opinion poll on Irish attitudes on integration issues in the EU showed a decisive 2:1 or 3:1 majority for keeping our autonomy.
Now is the time to keep our nerve – not to discard the green jersey.