A European Rescue Plan: But Not for ‘Low Tax’ Economies Post author By Philip Lane Post date March 20, 2009 This report from Reuters reveals the thinking of some German lawmakers. Categories In Banking Crisis, EMU, Fiscal Policy 14 Comments on A European Rescue Plan: But Not for ‘Low Tax’ Economies ← The Economist on Ireland → Two Scenarios for the Banks 14 replies on “A European Rescue Plan: But Not for ‘Low Tax’ Economies” Wow! You wouldn’t have expected them to be that explicit about it. The gloves are really coming off the Germans now. It should be noted that this “rescue fund’s” existence has been denied by the ECB, the Irish Govt (via Michael Martin) and the German Finance Minstry this morning. Im not saying it doesn’t exist in any shape or form, but possibly it hasn’t been as formally created as the story suggests, and that therefore there probably aren’t any hard or fast rules in place on it yet. But clearly tax policies are going to be core part of the new European agenda going forward. That said, if i was Libertas or someone else who was against the Lisbon Treaty, i’d be jumping on these comments, particularly those about Ireland’s alleged “past sins” being closely looked at. Seriously, being lectured by a German for past sins??? Insane comments to make in a public interview. This sort of story is not going to help in getting Lisbon passed. Is that what this fellow wants? The government could politely refuse the German offer and go to the IMF instead. The latter is unlikely to go after our corporation tax rates and the rest of the terms would likely be similar. Am I wrong to think that economists have a low opinion of corporation tax? I’ve read about research by the US CBO that 70% of the tax is effectively paid by employees through lower pay. Well… were you expecting the germans and their higher taxes on their lower salaries to bail out a country with a completely faulty tax policy without requesting changes? uhmmm, if Sean Fitzpatrick goes to your home to ask you for money for his luxury mansion and his luxury cars… would you give it to him? The party is over, Irish TDs earn more than german TDs, Irish doctors get more than german doctors, irish nett average wage is higher than german nett average wage… but Ireland wants German taxpayer money and keep the same policy that bring it here. Yes, Ireland should vote No to Lisbon. Those greedy Germans don’t want to share their tax with us and Ireland should make them pay. I don’t dispute the points you are making BF, and this is of course the big reason why we should solve our problems ourselves if possible. What I am saying is that Continental politicians should watch how they express themselves since, as we saw last year, their words will certainly be used against them by a skillful and ruthless No campaign. Another No vote is in no-one’s interests. Let’s see: Germans export a lot more than they import. Germans save a lot and their financial institutions then lend this to feckless people in e.g. Ireland. The Irish then borrow this money to buy goods from Germany. So the Germans depend on feckless foreigners to borrow their saving to buy the good the Germans make. If the foreigners stop doing this the Germans are stuffed. Replace “germans” by “chinese” and “irish” by “americans” and the same holds. The Chinese are going to continue to lend to the US government to prevent problems in China. They’re not stupid. As for the Germans….? I don’t see how rising corporate tax will help us, but I’m sure that any low paid German TD will do a lot more than all those TD’s in Leinster house with their obscene salaries, so let’s listen to them. I hope Ireland won’t just take another late, slow, hugely expensive, poorly innovative and useless Irish solution to this Irish problem. Kevin, Re helping Lisbon pass or not. I though though small our voice was respected at the table or so somebody kept on telling us last summer. Lisbon will pass or we will fail is blunt enough. Considering senior politicos they are cracking jokes about invading the Swiss we are to be thankful What no one seems to have raised so far is the extent of the responsibility the likes of “prudent” Germany have towards “feckless” Ireland’s current state. Since the initiation of the EMU Ireland has had to stomach inappropriately low interest rates in order to persuade those prudent Germans to spend their cash. We felt the pain of this through inflation, lessening competitiveness and a housing bubble. Events such as this are inevitable in a currency union with only loosely correlated business cycles, as the convergence process takes place its only right that the high growth nations get a bit of help when things get overheated. As the weekend beckons I’m going to try something a little provocative… Comparing Irish parliamentarians’ salaries to those of their German counterparts: There are many more German TDs than Irish. They produce roughly the same amount of legislation / hot air/ outrage real and fake etc etc Therefore the Irish TDs should be paid more! ECB interest rates set very low to flog some life into the German economy contributed to the absurd Irish property boom, but the Government could have acted differently and chose to pour petrol on the fire instead. Post Lisbon we can expect our anomalous corporation tax to come under more concerted pressure than at present. To the Germans, we’re just a corporation tax haven, benefitting from their economy while doing nothing useful; a Lichtenstein for companies. Added to the mismatch in monetary policy, there is also the point that Germany was I think the only country to gain in exchange rate competitveness through EMU. Selling votes is good policy only if there are any who will buy them…. Ireland is the only jurisdiction with a popular vote on federal EU. This may be more important than you think. Watching Germans negotiate by megaphone is like seeing Hippos mate…. fill in the blanks yourself, the Vote is more important than a damn joke! Comments are closed.