Vol. 418 No. 6
2 Mr. Noonan (Limerick East) asked the Minister for Finance if he will outline the discussions, if any, he has had with representatives of the co-operative movement in respect of their concern regarding the abolition of the exemption from corporation tax enjoyed by the co-operatives; his views on their submissions; and if he will modify his proposals to take account of their concerns.
I met a deputation of representatives of the Irish Co-operative Organisation Society Limited on 11 March last, at which the society voiced their concerns at what they saw as the consequences of the abolition of the co-operatives' exemption from corporation tax as announced in the budget. The society also sent me a copy of their submission on the matter prior to this meeting.
The Deputy will appreciate that it would not be in order for me, at this time, to express a view on any or all of the concerns voiced by the society, or indicate whether or not the budget proposal may be modified. As is the case with all representations made, I will, of course, bear them in mind in preparing the Finance Bill. I do not intend to anticipate subject matter appropriate to the upcoming debate in this House on the Bill.
(Limerick East): Would the Minister agree that he has grossly underestimated the yield from this tax and will he comment in particular on the position of An Bord Bainne and whether he intends to exclude them from the scope of this tax?
I have examined the role An Bord Bainne play as a major exporter who act on behalf of the other co-operatives. I have had the benefit of detailed discussions with an Bord Bainne, ICOS and some of the other major co-operatives and my officials have met representatives of the smaller co-operatives to see how best to handle the situation with regard to An Bord Bainne. I am conscious of the work they do and I am certainly not anxious to undermine the major part they play in exporting from this country.
(Limerick East): Would the Minister agree that this is a particularly punitive measure, given the nature of the co-operative movement and the manner in which they conduct their affairs? Would he agree that to go from zero to a 40 per cent corporation tax over a range of activities is too steep and too sudden a jump? Would he consider amending his proposals so that no activity of the co-operative movement would attract a rate of tax higher than 10 per cent?
As I said, I am bearing in mind the case made in the representations to see how this can be dealt with. I do not accept that this is a punitive measure. The co-operatives are economic entities. Apart from the co-operatives who are now public limited companies, many others are very substantial traders in the market place. We all want to see that. I do not think Members want to see a company who can make substantial profits being exempt from corporation tax. At the same time, I agree that to move from a zero rate of tax to a 40 per cent rate of tax, especially in the case of small co-operatives, is difficult, particularly when the larger co-operatives pay tax at the rate of 10 per cent. I am particularly concerned about co-operatives who are not engaged in manufacturing or processing but who collect the raw material for another co-operative who process it and pay tax at the rate of 10 per cent while the co-op engaged in the preparatory work would have to pay a higher rate of tax. I am looking at this matter.
