Republican News · Thursday 28 February 2002

Adams challenges Harney

BY ROBBIE MacGABHANN

"Ireland is not for turning on this issue. There are no circumstances in the short, medium or long term in which Ireland will cede our fiscal autonomy to EU institutions." This was Mary Harney speaking to the Institute of Taxation last week as she firmly bolted the stable door on a long runaway Irish economic sovereignty.

Having given up control over exchange rates, interest rates and allowing the EU set all sorts of constraints on government spending and funding for state-run business, Progressive Democrat leader Mary Harney has set a marker. The coalition government will not, it seems, support German proposals for tax harmonisation in the EU.

Harney's robust U-turn on ceding economic power to the EU was only part of a busy week on the EU. Chris Patten, former Tory and now EU Commissioner came to Ireland and gave his contribution on the failed Nice Treaty. Fine Gael seemed to be in disarray over the Harney proposals, while in the days before the minister made her intervention there were other clear examples of attempts at the highest levels in the EU to influence 26-County economic policy.

Sinn Féin President Gerry Adams MP focused on another aspect of Mary Harney's comments on the EU. He said that the Tánaiste's remarks that there are no circumstances in which Ireland will cede fiscal autonomy to EU institutions are to be welcomed. Adams highlighted the fact that, "as one of the leading advocates of the Nice Treaty, Mary Harney is in favour of giving up the power of veto, which is the very mechanism that we would employ to prevent such a situation arising."

Mr Adams also said: "Sinn Féin believes that there is a need for a progressive tax system across the EU but we in Ireland need to get away from the mindset that simply having the lowest rate of corporation tax is an economic cure-all. There is no doubt that it has been an attractive feature in bringing transnational companies to site in Ireland. But a creative corporate tax regime has an important role to play in funding and encouraging research and development by Irish businesses. Yes, we need to protect our right to set taxes. We need also to think about why that right is being dissipated and most importantly we need to think creatively about how to use tax incentives to develop business, safeguard existing jobs and create new ones."

Control over our economic policy was also an issue highlighted by the actions of the EU Commission and Goodbody Stockbrokers. The EU Commission published a report on the implementation of its Broad Economic Policy Guidelines. This is where it tries to get member states to set spending policy within desired EU ranges.

The EU Commission wants the coalition government to stop linking public sector spending commitments to wage increases. This is the last lever, flawed and weak as it may be, that workers have in Ireland for securing social progress in resolving inequality and the EU wants to shelve it.

Interestingly, the EU Commission praises the deregulation of taxis, which all sides to the dispute will now admit is still a mess. It just goes to show how out of touch they are with what's actually happening in Ireland.

Goodbody stockbrokers warned that the government will have to increase taxes or cut spending in order to meet EU budgetary criteria. Interestingly, Mary Harney had nothing to say about these realities of Irish involvement with the EU. She obviously decided not to rake over past government failures. One wonders how long it will be before they will cave in on the tax issue. Watch this space.