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Ireland 'can't win low tax race'

ICTU's economic advisor has said Ireland's low rate of corporate tax is unsustainable and is fuelling what he called a 'race to the bottom'.

Paul Sweeney, speaking at CORI's annual social policy conference, said the reduction of the rate to 12.5% was a 'major mistake', as an industrial policy based on artificial subsidies was not sustainable.

He said the enlargement of the EU meant that Ireland was being pursued by new members in the tax competition race, citing Estonia, which has a rate of zero for many firms. 'This is a race Ireland cannot win,' he said.

Mr Sweeney said the competition to attract investment could lead to a lowering of standards in areas such as labour regulations and health and safety.

He said the cuts in corporation tax were a huge subsidy to businesses in the financial and non-trading sectors, with no quid pro quo requested in return.

Mr Sweeney called for the standard corporation tax rate to be raised 'in time' to 0%, in coordination with the EU, while what he called 'super-profits' from sectors where there was weak competition should also be taxed.

* The burden of taxation in Ireland rose strongly in 2003 but Ireland continues to have one of the  lowest tax burdens in the industrialised world.

That is one of the findings of an international survey of taxation published by the OECD in Paris today.