Bruce Arnold

Critic of Public Affairs, writing about art, theatre, music and politics

Yes vote would open way for Europe to outlaw our low tax

Last week's introductory article about the Lisbon Treaty has left many issues still open for present and future debate. The most important of all of them derives from the actual text of the amendment we are being asked to approve.

These are the first two sentences of the text:

"The State may ratify the Treaty of Lisbon signed at Lisbon on the 13th day of December 2007, and may be a member of the European Union established by virtue of that Treaty. No provision of this [Irish] Constitution invalidates laws enacted, acts done or measures adopted by the State that are necessitated by membership of the European Union, or prevents laws enacted, acts done or measures adopted by the said European Union or by institutions thereof, or by bodies competent under the treaties referred to in this section, from having the force of law in the State."

Voting Yes on this amendment makes a fundamental change in the status of every man, woman and child in Ireland. It gives them two citizenships, one of Europe, together with the Irish citizenship they already have and cherish. With the supposed gift of these two citizenships there come two spheres of responsibility and two layers of laws to which they must give allegiance.

The first sentence bestows this significant change. The first part of the second sentence appears to give protection against the invalidation of laws already enacted or that would be necessitated by the obligations of membership of the Post-Lisbon EU. This would seem to be a good thing. Has not our membership of Europe immeasurably improved our lives?

But let us look a bit more closely at the second part of the sentence. This seems to give an equal value and rating to the laws of the EU, which we cannot prevent from having the force of law in the State.

Various reassurances have been given about the innocuous impact this will have. We are safe, the Yes vote campaigners say, because such laws will leave important things unchanged, notably our taxation laws, and, more precisely, our low corporate tax rate of 12pc.

This hot potato has been tossed around for too long. Let us examine the facts. One apparent fact has been offered by the President of the EU, Jose Manuel Barroso, who said on his recent visit to the University of Cork that there was nothing new in the Lisbon Treaty about taxes.

This is not true. One of the huge number of changes embraced by the carpet-bag approach to constitutional reform in the EU by means of the Lisbon Treaty is a phrase amending the treaty, on harmonising taxes, by charging the EU with the following task: "to avoid distortion of competition".

The brief phrase is so insignificant a point as to be easily overlooked, but of such points are constitutional challenges made. One needs to know how constitutions work. With this five-word phrase in the treaty, there is an open invitation to the European Court of Justice to move against the preferential Irish rate and outlaw it. And the court, which is supremely placed to interpret the treaty in accordance with the treaty's own wordings, would undoubtedly prevail in any such judgment.

Clearly there should be no distortion of taxes in Europe. The Irish case was once a valid one but this is now questionable in the extreme. It is also questionable in the case of Greece, which has an even lower rate. Sarkozy is right in wanting reform and many others in Europe would want it too. But they are not the issue. The issue is the law and the indisputable fact that the European Court of Justice has the ultimate right to interpret change in the law and require reform in line with that change.

What is seriously wrong about what has been done is that we have been lied to, not for the first time, about the entirely benign structure of laws that will come into force if we vote Yes. They are not all benign and the lying is disgraceful.

Under the Maastricht Treaty on European Union, which currently governs us, the restrictions on harmonising tax laws are helpful to Ireland's position since it does not prejudice the European Union's internal market. Under the Lisbon Treaty a new concept, where harmonisation may be enforced by the Court of Justice as a result of the distortion of competition, could well affect every town in Ireland where industries have been established on the basis of the preferential corporation tax rate, or where they might be established in the future.

To save ourselves from this would need a special protocol, exempting Ireland from the idea that distortion of tax laws is wrong. For us such distortion would seem right, since it has been the correct solution, and successfully so, for the last 40 years. But the argument, which would appear preposterous at any time, would be simply ludicrous in the run-up to a referendum of the kind we face. In theory the Protocol would be sought, and got, if it were attempted, because the EU needs and wants a Yes vote, and is already prepared to buy it by deceit and lies.

In reality it is too late for us to demand or get such a protocol now. The last realistic chance was the March Summit of EU Prime Ministers, when we could have asked, but did not. Such a protocol would have to be in a new treaty, substituted for Lisbon in the event of its rejection. A so-called "declaration" would not be enough since it would not be binding.

Any such move, of course, would render us the laughing stock of Europe, since it would disprove the "innocuous" nature of the Lisbon Treaty and would knock on the head the greater part of what has been said about the survival of our preferential corporate tax rate.

If we do vote Yes, however, we bring unknown penalties down on our heads because none of those proclaiming the wonderful advantages of the Lisbon Treaty are being truthful about the constitutional nature of power. Indeed, they are being frugal in their recognition that this is a constitution in the full sense of that term.

Nothing as dire as the destruction of our carefully created, carefully nurtured industrial investment, on which so many Irish men and women depend for their livelihoods, could possible result from voting No. We would simply preserve the status quo and the rest of Europe would have to live with it.