The tax harmonisation project has multiple “deficiencies”, including a creeping encroachment on individual countries’ sovereignties, Brian Hayes said.
The Dublin MEP said it was absolutely correct for the Republic of Ireland not to support the Financial Transactions Tax (FTT) proposal, which is also being ignored by the United Kingdom.
His dismissive comments come as the 10 EU states involved in the proposal postponed yet another negotiation.
Mr Hayes said yesterday: “This week the 10 countries who have signed up to an FTT under enhanced cooperation postponed their negotiations once again. This is the third time that negotiations have been cancelled in three months.
“It just shows that Ireland was absolutely correct not to sign up to the FTT plan. The hesitation from the 10 Member States shows that large scale tax harmonisation in the EU is not working and not particularly wanted.”
He said the tax harmonisation project was a threat to Ireland’s sovereignty and also a distraction during Brexit negotiations.
Joining the scheme would also be financially reckless for Ireland, which benefits from its current tax system.
Mr Hayes said: “Regardless of the delays, there are many concerns about the enhanced cooperation arrangement from an Irish perspective.
“There could be an impact on the Irish sovereign debt market and an impact on the liquidity of the financial sector as a whole.
“It is crucially important that the EU should let the negotiations on Brexit proceed and take stock of the consequences of the UK’s exit before going full steam ahead with any grand tax plans.
“If Ireland were to participate in an FTT, we would have to abolish our stamp duty on shares in Irish incorporated companies, which is 1%. This yields almost half a billion euro every year. The Commission’s FTT plan imposes just a 0.1% tax on shares so we could potentially face a loss to the Irish exchequer if we signed up to the plan.”