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If Irish hike tax, Germany may back bailout cost cut -lawmaker
March 4, 2011 / 9:36 AM / 7 years ago

If Irish hike tax, Germany may back bailout cost cut -lawmaker

BERLIN, March 4 (Reuters) - Germany may be willing to support a cut in the cost of Ireland’s EU rescue package if Dublin raises its low corporate tax rate, a senior lawmaker in Chancellor Angela Merkel’s party suggested on Friday.

Michael Meister, deputy parliamentary leader of the Christian Democrat (CDU) grouping, told Reuters that any cut in interest rates on Ireland’s bailout repayments would have to be matched by a lowering of the country’s risk profile.

“A small rise in Ireland’s lower than average corporate tax rate” might achieve this and form the basis for a possible renegotiation, he said.

Merkel on Wednesday cast doubt on the incoming Irish government’s hopes of significantly renegotiating the terms of the European tranche of the 85 billion euro rescue it received from the European Union and the International Monetary Fund in December. [ID:nLDE72126Z]

But Ireland’s prime minister in-waiting Enda Kenny will again press for a cut in repayment costs when he meets Merkel and other leaders in the European People’s Party in Finland later on Friday. [ID:nLDE7221FU]

Kenny has to date ruled out hiking Ireland’s corporate tax rate.

Meister is one of the co-authors of a policy paper from CDU parliamentarians that is pushing Merkel to take a hard line with her euro zone partners at summits this month over any attempt to strengthen the region’s bailout fund.

The International Monetary Fund said in Washington overnight that the interest rate on the IMF portion of Ireland’s rescue loan would be reduced under changes in member countries’ subscriptions and voting shares that came into effect on Thursday. [ID:nWAL3EE726] (Reporting by Andreas Rinke; writing by John Stonestreet)

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