Ireland’s politicians should determine their country’s corporate tax rate without pressure from other countries, U.K. Chancellor of the Exchequer George Osborne said.
Ireland, which will receive an international rescue package led by European Union governments and the International Monetary Fund, may face demands for wide-ranging restrictions on economic policy, including abandoning its 12.5 percent corporate-tax regime. The U.K. offered a 3.25 billion-pound ($5.1 billion) bilateral loan to its neighbor, citing economic ties.
“The Irish have got some very difficult decisions about their budget deficit, and that should be a decision for the elected Irish government and the Irish parliament, not a decision for the British government or the German government or anyone else,” Osborne told CNBC television in an interview broadcast today.
Irish unemployment more than doubled in the past two years as the economy shrank, banks and builders cut jobs and a housing boom ended, pushing the budget deficit to around 12 percent of gross domestic product this year. Finance Minister Brian Lenihan will outline a budget on Dec. 7, the first step in a four-year plan to cut the deficit to 3 percent of GDP by 2014.
The U.K. government plans to cut its business tax rate at a time when it is cutting spending and raising taxes, Osborne said, which shows his country’s “determination to be the go-to place for investment in the world.”
British people support spending cuts because they understand their country’s fiscal situation, Osborne said.