asked the Taoiseach if he has any proposals to improve the accuracy and interpretability of national income accounts and their usefulness in economic policy making, in view of consistent reports (details supplied) that these accounts present an inflated picture of the true value to the economy of Irish exports.
Ceisteanna—Questions. Oral Answers. - National Income Accounts.
1.
The article referred to by the Deputy examined the impact of high value exports by multinationals on Ireland's merchandise trade account. In the national accounts the measures of national income and gross national product are compiled according to international standard definitions and take account, on a consistent basis, not only of net merchandise trade but also of the net flows of factor incomes, such as profits and dividends, to the rest of the world. These measures which take full account of both visible and invisible flows with the rest of the world are available for economic policy purposes.
On a more general basis, the recent report of the National Statistics Board, approved by the Government, recognised the central importance of the national accounts statistics. A high priority is therefore accorded to the further development of the accounts. This will include the provision of more detailed sectoral estimates which will further facilitate economic analysis.
Is the Taoiseach aware that the article claimed that approximately 30 per cent of our exports were, to use the term given in the article, phantom in the sense that they represented transshipped goods? That was without taking any account of the possibility of transfer pricing in view of the lower tax level applying here. Have the Central Statistics Office any facility for or practice of going behind the figures supplied to them by companies where the magnitude is very large, with a view to re-evaluating them in order to ensure that the figures truly represent the economic added-value within the country, rather than simply the financial profit which the company wish to show within the country for tax purposes?
They are crooked.
It would be the aim of the CSO constantly to improve the validity and reality of the statistics which they produce. To that extent I am sure they would use all possible mechanisms available to them through the Government process.
Have the CSO either a practice of or a facility for going behind figures supplied to them or do they — or must they — accept the bona fides of those figures once they are sent in by a company?
Figures are not just produced out of the air by companies. They are subject to audit and various other verification procedures. I do not know that there is any ground for any misgivings in that regard.
Is the Taoiseach aware that the possibility does exist in regard to the valuation of company transactions within the same group where goods are imported into this country from a subsidiary of a company in one country and exported from this country to a subsidiary of the same company in another country? The company can put any value they like on the price of the import and that of the export and they will do so in such a fashion as to reduce the value of the import and maximise the value of the export in order to have the maximum profit within this country if the tax level applying here on the company is below that which would apply either in the country from which the goods were imported or the country to which they are exported. Companies have that facility and have——
May I ask for brevity?
Is the Taoiseach aware that such a possibility does exist? From the point of view of accuracy and usefulness of national accounts——
I am afraid we cannot debate this matter now.
——would the Taoiseach not ask the CSO to do a second valuation in respect of some of the sectors in question?
As the Deputy knows, the functions, authority and powers of the CSO are limited. However, I would point out to him that trade statistics are compiled and presented in accordance with international guidelines. They correctly include the high value exports of multinational companies, irrespective of whether or not the related earnings are retained in the economy. In fact, the scope, coverage and valuation of trade statistics are determined by EC Council Regulations Nos. 1736/75 and 1224/80. Therefore, fairly comprehensive international guidelines have been laid down in this area.
A Cheann Comhairle——
A brief question, Deputy.
Would the Taoiseach agree that the transfer pricing mechanism, particularly of multinational companies, has been ignored by the Revenue Commissioners during the past 15 years so as to accommodate those companies and as a result that the export figures have inevitably been distorted?
I would not accept that at all. In the main these are highly respected multinational concerns of the highest integrity. They conform to best international practices and procedures and there is no question in my mind that there is anything of the kind that Deputy Desmond is suggesting.
Ceist a dó, chun an Aire Tionscail agus Tráchtála.
Would the Taoiseach agree that there is no other explanation——
Deputy Desmond, please.
——for the transfer out of the country of £1,300 million of export profits?
I would not agree.
We all know what is going on.
The Deputy and I never agree about anything, anyway.