Marian Harkin: Challenges over EU Recovery Fund and Tax Power
Marian Harkin questioned the European Commission's recovery fund allocation and warned against Commission overreach on tax policy, asking the minister for the government's view. She supported President Michel's two-to-one balance of direct funding to loans but said the GDP-based formula disadvantages Ireland and raised concerns about Article 116.
EU recovery fund allocation
She welcomed President Michel's proposals on the new negotiating box and backed a two-to-one balance of direct funding vis-à-vis loan funding. She expressed real concerns that the Commission's use of GDP to calculate recovery fund shares leaves Ireland coming off badly.
Brexit, MFF and Covid context
She noted the Taoiseach's first meeting and the intricate negotiations ahead on the MFF, Brexit and Covid, and wished the minister and the Taoiseach well for the talks. She welcomed the £5 million Brexit reserve but questioned whether it is a sweetener for Ireland getting less from the recovery fund.
Tax sovereignty and digital tax strategy
She insisted taxation remains the sole competence of member states and said she does not want the Commission to dictate Irish tax policy, while also urging Ireland to play a strong role in tax justice. She recommended pursuing solutions through the OECD and the BEPS programme and pursuing a balanced digital tax that does not disadvantage Ireland's tax take.
Apple ruling and state aid concerns
She said she agreed with the Court of Justice decision in the Apple case and argued the Commission's state aid decision was an overreach and an example of competence creep. She reminded that state aid is within Commission competence but taxation is national competence following a referendum.
Article 116 and qualified majority questions
She asked the minister for the government's perspective on talk of using Article 116 to enable qualified majority decisions on tax policy and warned that removing the veto would leave Ireland "skating on thin ice."
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Thank you, I'm sharing Cahirlech. First of all, can I congratulate Minister McConnelogue on his appointment and I want to wish him and the Taoiseach well at this very important meeting on Friday. It's the Taoiseach's first meeting and there's many intricate negotiations ahead on the MFF, Brexit and all of this in the shadow of Covid. So I hope that you are part of a good outcome for Europe and for Ireland. First of all, can I say I'm pleased to see President Michel's proposals on the new negotiating box. It shows perhaps that if leaders from small member states come together, that maybe, just maybe, they can achieve positive outcomes. I support his proposal on the two-to-one balance of direct funding vis-a-vis loan funding. But I do have real concerns about the formula that's been used by the European Commission to calculate the amounts from the recovery funds to different member states. As we know, Ireland is coming off badly here. Using GDP as a measure, of course, skews it in Ireland's case. And GDP has always been a double-edged sword for Ireland. But I, like other deputies, would like to ask you, Minister, to give the government's perspective on the European Commission's proposal and the way they intend to divvy out, if you like, the recovery fund. The £5 million Brexit reserve is welcome. But again, is it included as a sweetener for the fact that Ireland will get less from the recovery fund? And I would like to see, and I know you're in the negotiating phase, but I would like to see that we could nail down those two issues, because they're going to be hugely important here. I think taxation will be high on the agenda, and in many ways, Ireland is skating on thin ice here. Now, actually, I agree with the decision of the Court of Justice in the Apple tax case, and I'll come back to that at another time. But I was concerned at the time, and this has been confirmed by the ECJ, that the Commission's decision that Ireland had breached state aid rules was overreach and what we call competence creep by the European Commission. State aid rules are the sole competence of the European Commission. Taxation is the sole competence of member states. We had a referendum here on that issue. Now, Ireland has a huge responsibility around tax justice and that multinationals pay their fair share, but that's a separate issue. We need to be careful sometimes what we wish for. I do not want the European Commission to have power to dictate our tax policy. But I do want Ireland, as a nation, to play a strong role in ensuring European and global tax justice. We can do this through the OECD and the BEPS programme, the base erosion and profit shifting programme, and by engaging proactively with our European colleagues in pursuing a digital tax strategy, which crucially does not disadvantage Ireland's tax take. I spent 15 years in the European Parliament, and I saw time after time, one proposal after another coming forward on a common consolidated corporation tax base, or CCCTB, which disadvantaged Ireland's tax take vis-à-vis other member states. So we have to work with our partners, but we have to make sure that any new digital tax is balanced and fair, that it delivers for our citizens, but that we're not left between a rock and a hard place. And finally, Minister, given that taxation is going to be high on the European agenda, there's a lot of talk about the Commission looking at Article 116, which would allow them to make decisions based on qualified majority decisions on tax policy, and that this would get rid of the veto. As I said, that's the thin ice Ireland is skating on, but I would like in your response, if you would give me your perspective on that. Thank you. Thanks, Deputy Harkin.
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