Misreading the Lisbon Treaty

Fri, Sep 18, 2009


It's possible with complex legislation to read what you think it says, rather than what it actually does say. This erroneous approach underpins an invalid argument that Article 2.79 of the Lisbon Treaty will result in corporation tax harmonisation.

Proponents of a No vote argue that Article 2.79 of the Lisbon Treaty would insert a six word amendment 'and to avoid distortion of competition' to a renumbered Article 113. The argument goes that while unanimity under Article 113 would be required to introduce any common tax rate, this amendment would give the EU Commission and Court of Justice "ample extra powers to erode Ireland's low corporate tax rate, despite the wishes of our own government."

Well, no. It won't because Article 113 of the post Lisbon Consolidated Treaty (which was Article 93 of the Treaty establishing the European Communities) only deals with indirect taxes. Corporation Tax is a direct tax and therefore Article 113 has nothing to do with Corporation Tax. Any assertion that the amendment would erode Ireland's low corporate tax rate is not the case.

Incidentally the phrase "and to avoid distortion of competition" in this amendment to the indirect tax provisions of the EU Treaty replaces the phrase "within the time limit laid down in Article 14". That time limit in Article 14 is spent - it was 31 December 1992.

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