A GROUP OF MEPs has tabled a motion in the European Parliament demanding that Ireland double its corporation tax rate of 12.5%.

The motion, which has been proposed by members from a number of the parliament’s groupings including the Socialist and Green groupings, argues that the financial burden now being backed by Europe – through its agreement to provide a bailout for Ireland’s banking sector – should be acknowledged by Ireland through an agreement to remove some of its competitive advantage.

It reads:

Solidarity is a fundamental principle of the European Union, as set out in the Treaties, and support for Ireland is therefore consistent with European values.

Considering that the common market needs a stronger common European fiscal framework to ensure good regulation and fair competition, including general provisions for a common consolidated corporate tax base as well as minimum corporation tax rates, we urge the European Commission to advance on the dossier of a Common Consolidated Corporate Tax Base… to ensure that the corporation tax rate will be increased to the average EU level of 25% in a spirit of solidarity.

The motion has been signed by German Green MEP Sven Giegold, who told PA that “introducing a common corporate tax rate in Europe is the only way to limit tax competition and the damaging effects this has had on the European economy and European solidarity.”

Giegold said the coalition of MEPs behind the motion showed a genuine sentiment among the members of the European Parliament to introduce a common taxation policy.

“Tax competition within the EU and the Eurozone enables cross-border businesses to avoid over €100bn in tax payments, notably by repatriating profits to jurisdictions with lower corporate tax rates,” he added, which undermined the spirit of a European common market.

Only eight MEPs had signed the motion when it was first tabled, however, out of the European Parliament’s total membership of 736. None of Ireland’s 12 members had signed it.

European leaders are divided on whether to demand that Ireland raise its corporate tax under the conditions of its European bailout; French president Nicolas Sarkozy has indicated he doesn’t think Ireland should be stripped of one of its best economic assets, though Austrian finance minister Josef Proell insisted that the bailout be dependant on it.

In today’s four-year budget plan, the outgoing government said the 12.5% rate – credited with attracting the bulk of Ireland’s inward foreign investment – would not be raised, despite the crisis in the public finances.

That decision was welcomed by the American Chamber of Commerce in Ireland.