Merkel says low corporation tax to blame for our banking crisis
IRELAND'S corporate tax rate led to "misallocations" that helped cause the country's banking crisis, German Chancellor Angela Merkel has warned.
In remarks that are sure to spark renewed fears about the safety of Ireland's low tax rate, Enda Kenny's key ally said that while European Union countries should set their own corporate taxes, the EU should agree to limit them to a certain range just as the EU already limits VAT rates to bands.
The chancellor made the remarks in response to a question from a member of the public after a speech at a think tank, called the Centre for European Policy, in Freiburg, where she was campaigning ahead of regional elections next month.
Germany's role in bailing out Ireland and Greece has triggered unease in Europe's largest economy and helped to deliver a stinging defeat to Merkel's party last weekend in the city state of Hamburg.
Her latest intervention came just days after Fine Gael leader Enda Kenny flew to Berlin to reiterate the importance of the 12.5pc rate to Ireland.
Brian Cowen emphasised the same message at a summit earlier this month where he said the corporation tax rate was "a central plank of our drive for competitiveness and as an indispensable part of our strategy for recovery."
Merkel signaled earlier this week that European Union leaders might be ready to renegotiate the terms of Greece's bailout as part of a broader package to shore up confidence in the euro.
"There certainly is a discussion about whether to consider extending the running time of the Greek programme," she said, adding that last year's aid plan for Greece was limited to three years while Ireland's bailout package, agreed last November, runs for seven years.
Merkel, speaking after talks with Greek Prime Minister George Papandreou, said that any extension would have to be a part of the comprehensive package to fight the debt crisis being negotiated for next month's EU summit.