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“Politically, it will be very difficult for Germany and France not to demand that Ireland raises its corporate tax rate,” said Daniel Gros, a former IMF economist and director of the Center for European Policy Studies in Brussels.
Supporters of Ireland’s low tax rate say it would be fatal for the former Celtic Tiger to kill off its incentive when it needs growth.
“Any change in the corporate tax regime would be counterproductive to the collective efforts to reduce the budget deficit,” said Danny McCoy, director of the Irish Business and Employers Confederation, which represents 7,500 employers. “Higher rates would mean less revenue for the state, as investment and jobs have the potential to move to countries outside the EU. This would not be in Irish interests or in the interest of the wider EU.”
But many ordinary Irish people are incensed that — in the midst of a crisis caused by reckless Dublin bankers who gambled hundreds of billions on property deals gone bust — the government is bailing out those banks, defending corporate profits, and expecting the population to absorb the vast bulk of cuts and tax rises.
The Rev. Sean Healy, a Catholic priest who leads a pressure group called Social Justice Ireland, called the government focus on protecting bondholders and corporate profits “hypocritical and deeply unjust.”
“Either everything is on the table or it is not,” Healy said. “By taking so many things off the table, the IMF and the government have created a situation where most of the adjustments will be made at the expense of the weak, the sick, the vulnerable and the working poor.”
Nonetheless, there were few signs Friday of protest on the streets of Dublin, only private expressions of shock and disgust that Ireland’s economy had been mismanaged so badly and fallen so quickly since 2008.
“There’s no point protesting. We’ve gambled away our sovereignty, and all we can do is try not to make matters worse,” said Eamon Delaney, a newspaper vendor. “Really, our own leaders have made such a shambles of it, the IMF crowd will hardly do worse.”
Steinhauser reported from Brussels.
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