Irish opposition leader fights to protect 'crucial' 12.5% rate

Enda Kenny, Fine Gael leader, yesterday said there were real fears the attractive 12.5 per cent rate was on the International Monetary Fund/European Union's negotiating table.

"There are genuine fears that the Fianna Fail/Green government will sacrifice our 12.5 per cent corporation tax rate as part of its bailout negotiations," the opposition leader said.

"A low corporation tax rate is a cornerstone of Ireland's economy and will play a crucial role in rebuilding the country."

Several government ministers have said the levy is non-negotiable, with finance minister Brian Lenihan issuing a warning on Wednesday night that it is a "red line" dealbreaker.

However, Ireland is under pressure from EU states, such as Britain, Germany and France, to move on the rate - the lowest in any major European economy - as a bailout compromise.

Fine Gael, which introduced the regime in coalition government with Labour in the mid-1990s, plans to introduce a private members' debate in the Dail (parliament) next week.

Mr Kenny said the company tax supported thousands of jobs in Ireland and teams of workers from the inward investment agency, IDA Ireland, trying to attract businesses around the world.

"The survival of the 12.5 per cent rate will be crucial for retaining thousands of jobs in multinational companies based in Ireland," he said.

"The IDA has hundreds of dedicated staff across the world trying to secure deals for investment and job creation in Ireland. A low corporation tax rate is crucial to their efforts."

Sinn Fein was targeted by Fine Gael over fears that it has not made clear how it would treat corporation tax.