Skip to main content
Normal View

Dáil Éireann debate -
Tuesday, 23 Nov 2010

Vol. 722 No. 4

Corporation Tax Rate: Motion

I move:

That Dáil Éireann confirm its commitment to the maintenance of the 12.5% rate of corporation tax as an indispensable tool for growth, job creation and economic recovery.

With the permission of the House I will share time with Deputies Deirdre Clune, Michael Creed, Olivia Mitchell, Shane McEntee and James Bannon.

Is that agreed? Agreed.

When this motion was drafted there was quite a lot of speculation that the intervention by the IMF, the ECB and the European Commission would force Ireland to increase its corporate rate of tax. This would be damaging for Irish industrial policy because the 12.5% tax rate is a key element of Ireland's attractiveness for inward investment. It is particularly important for the United State of America, which wants a gateway into Europe. The US wants a highly educated English speaking young population as a potential workforce. It also wants its corporations to be highly profitable and does not want to pay very much tax overseas.

The low corporation tax was a deliberate incentive put in place by the Irish Government. There used to be a 10% corporation tax rate. That came under pressure in the 1990s when the rainbow coalition, under the Taoiseach, Deputy John Bruton, was in Government, and the Minister for Finance, Deputy Ruairí Quinn, negotiated the 12.5% rate. It was subsequently put into effect by the incoming Government. Therefore, the origins of the 12.5% rate are shared by Fine Gael, Labour and Fianna Fáil. When the tax rate came under pressure, I thought it would be important to reaffirm our commitment, across party lines, to the 12.5% rate.

I would like if Sinn Féin would also commit to the 12.5% rate. Their 2007 election manifesto, in the section that dealt with reform of the taxation system, proposed to raise the corporation tax rate from 12.5% to 18%. I believe that was a serious mistake, arising from a lack of understanding of how Irish industry works and how the incentives work in attracting foreign investment into Ireland.

When the motion was drafted and the Fine Gael Front Bench agreed that it would be tabled tonight, it appeared as if the corporation tax rate was under threat. Now, I believe there was no such threat. It was an invention by the Minister for Finance, who has just left the Chamber, so that a victory could be claimed by the Government when the 12.5% was not touched. When I met Commissioner Olli Rehn in Dublin, I asked him a direct question. He quoted the law and said, "Rates of taxation are matters for the sovereign Government", which indicated that the Commission was not putting any pressure on.

We know what the United Kingdom position is, although some of their media personalities would lay the charge that our 12.5% is unfair and that corporate headquarters of UK companies are being switched from London to Dublin because of the low tax regime. The British would protect our 12.5% rate and combine with us to do so for different, quasi ideological, reasons. In Britain, and particularly in the Conservative Party, there is a strong commitment to maintaining sovereign control over tax rates and tax matters. The UK Government would be one of the last in Europe to concede anything there.

We were told the Germans were out to get us, but Chancellor Angela Merkel made a statement recently saying she was not putting the 12.5% rate on the agenda if a bailout was being organised for Ireland. She was quite emphatic about it. This was followed by a less categoric but quite clear statement by President Nicolas Sarkozy of France. All of those were reputed to be out to get us on the grounds of the 12.5% rate, but it is quite clear they are not.

I think I understand Deputy Brian Lenihan's motivation. The IMF has always been seen as the bogey man of Irish politics. When we are trying to get the children to go to sleep at night we tell them the bogey man will come or Santy will not come, or whatever the threat might be. Deputy Brian Lenihan's bogey man was the IMF, which would come if we did not do the right thing on the fiscal side. After threatening us with it so often, he had to explain why the IMF was arriving. In a very creative and novel way, as only the Minister could invent, he told us the IMF would protect the 12.5% rate, because being Washington based it would understand the significance of the 12.5% rate and how important it was to attract American investment into Ireland.

I do not believe there is a real threat. However, it is still worthwhile having all-party agreement on it at this time to make a clear declaration that we stand united on this important issue.

It is also important to stress that whatever the fiscal correction may be on budget day and whatever is in the four year plan tomorrow, we cannot cut or tax our way out of our difficulties. If we cut and tax sufficiently and have a parallel growth and jobs strategy there is a possibility that we might work our way out of them. The 12.5% is a symbol for jobs, growth and secure employment. There are 180,000 people working in American companies that were attracted into this country largely by the 12.5% tax rate, and they are on the cutting edge of the economy.

There is a good story to be told about Ireland as well as all the doom and gloom. Part of the good story is that we are about to get into a balance of payments surplus. "Ireland Incorporated" is solvent. Whatever about the banks and the Government, the country as a unit is solvent. One of the tests of a country's solvency is that it is exporting more than it is importing. We are just about to go into a balance of payments surplus in the first quarter of next year. That is very good news. In the last quarter for which returns are available, exports went up by 11%. Manufacturing industry is roaring along in Ireland. One can see the evidence on the roads, where container trucks head for the ports every day. They represent the hard work of Irish people in exporting businesses in factories all over the country. We have a productive workforce who work hard and their jobs are secure.

There is a change in the type of jobs that are most attractive and that Ireland is best suited for. In my city, Dell is often used by the media as a benchmark for failure. We are often reminded of job losses and redundancies in Dell, but it is now becoming a benchmark for success. In Limerick, over 1,000 people are employed in Dell and the company intends to hire another 150. Jobs in the company are all at the higher end of the market. Dell's financial centre for Europe and the Far East is now in Limerick. Its logistics section is in Limerick. Not a single truck goes out of the industrial estate in Limerick but the experts on logistics organise supply to their factories all over Europe and Asia. We know the concept of just-in-time delivery. That is all done through the Dell plants out of Limerick. Of course, those workers are highly paid. Dell has a huge research and development unit there. Suddenly, the company is being reconfigured.

Anyone who knows the Apple story, especially people from Cork, will remember when Apple downsized to a couple of hundred people and it looked as if it was going to disappear. The company changed its business model and it grew in a different direction, with more highly skilled and valuable jobs. Deputy Clune will know the company now employs more than 3,000 people in its plants in Cork. The nature of work is changing in Ireland. There is much more high-tech, highly skilled and highly paid work. Our future lies in the manufacturing area and the corporation tax rate of 12.5% is crucial to it. It is vital, be it in the IT, pharmaceutical or investment sectors, or any other sector.

It is essential to focus on the financial services industry, which is creating and maintaining a very significant number of jobs in Dublin. It employs skilled people, the majority of whom are graduates. Much of their work involves back-shop activities, including the processing of data and accounts for others, but, increasingly, they are becoming involved in the real financial services business of trading. People are trading from Dublin now and this is very significant. We should be concentrating on this area. Any jobs policy that accompanies the four-year programme to be published tomorrow should have a section on the financial services industry to determine where it can be tweaked, adjusted and made more attractive. Many of the people who work in that industry are emigrating. We could create extra jobs in Dublin. Former Taoiseach Mr. John Bruton was recently appointed as the main promoter in this area. I hope the sector will thrive.

We should not forget indigenous industry. We have a great food industry in this country. Our farmers are producing food of the best quality. As the processing industry develops, as it has done over recent years, it will continue to comprise a very significant area. Not only are companies such as Kerry Group doing very interesting work in Ireland and providing very good employment, but they are reversing the historical trend and have invested very significantly in the United States. Ireland is now a bigger investor in the United States through its multinationals than China. It cuts both ways. We need not portray the image of the mendicant with the begging bowl any more across the Atlantic because there is major investment by indigenous Irish multinational companies in industry in the United States. There is two-way traffic and I do not believe the tax rate of 12.5% will be under threat from the United States because we are a major contributor to its economy. Long may it last.

There is a good story to tell and I hope it is capitalised on in the four-year plan, which is to be issued tomorrow. If it is all doom, gloom and cutbacks, it will not do the trick, provide certainty, build confidence or encourage people to believe they have a future in Ireland using their talents to work. I sincerely hope the initiatives we all take will be successful.

I will end on a sour note. The motion proposed is a perfectly good motion that covers the ground and which should have been supported by the Government. Instead, the Department of Finance, through the Minister, told me it had to file an amendment. The amendment was cleared by the Cabinet. The Government is looking for support in the very difficult decisions it is making and the Taoiseach rang the leaders of Fine Gael and the Labour Party last night stressing the importance of what is to happen on budget day, and explaining how essential it is for the country that the budget be passed, yet, in the usual churlish, tribal mode, Fianna Fáil could not agree to support the Fine Gael motion tabled in the interest of the country. It felt it had to table its own version so Fine Gael would be forced to support a Fianna Fáil motion. We will see how that plays out in the vote tomorrow night. If the Government is looking for co-operation and help from the Opposition, it should support our perfectly good motion tomorrow night and withdraw its amendment.

I will start by referring to the last point raised by Deputy Noonan. I was very disappointed and disgusted to see that the Government saw fit to table a counter-motion to a very clear, simple statement. All we wanted to do was achieve agreement. There should have been cross-party agreement and a statement from this Parliament that the corporation tax rate of 12.5% is intact and not under threat of being increased. The tactics used by the Government are similar to those used by it approximately three weeks ago when Deputy John Perry proposed to introduce a State-backed loan guarantee scheme for SMEs. We hoped the Government would have accommodated this. Perhaps the motion was not entirely as the Government would have liked it to be. The Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, stated last September that a scheme such as Deputy Perry's should be introduced, yet the Government had to vote down Deputy Perry's motion and table an amendment. Clearly, party politics is entering the equation when it should be a matter of the Parliament standing firm behind the corporation tax rate, which is very important to protect Irish jobs and attract future investment.

We are a small island nation on the edge of Europe. While we speak English and have an educated workforce, we should realise the corporation tax rate of 12.5% has been a cornerstone of our economic development. It has represented a huge draw in attracting foreign direct investment.

When one considers the number of jobs created in Ireland through foreign direct investment, one will note this figure per head of population is higher than that in any other country in Europe. Foreign direct investment supports approximately 240,000 jobs here. Foreign direct investment accounts for 50% of our corporation tax and 70% of exports. It is estimated that it is worth approximately €19 billion in expenditure in the economy.

The OECD estimates that a 1% increase in the rate of corporation tax will lead to a decrease in inward investment of 3.7%. There will be a corresponding reduction in the yield from corporation tax and also in the yield from all the related taxation elements, including those pertaining to employment.

Apart from the impact on the economic take, there is an impact in the sense that the corporation tax rate is extremely important for attracting jobs. If one considers various sectors, including biopharmaceuticals, biotechnology, financial services and technology services, one will note the private sector is actually the main driver of our economy. The Government only accounts for approximately 20% of our GDP. We have done so well in attracting large companies, products and services to Ireland. Eight of the top ten global medical technology companies are present and manufacturing in Ireland. They have the highest per capita employment rate across Europe in this sector. Each of the top ten pharmaceutical companies is operating in Ireland. In ICT, nine of the top ten companies are based in Ireland. The number of Internet-based companies is growing. They are growing their bases here and there are clusters and networks developing in this area. We must not forget the importance of indigenous companies. Half of medical technology companies are Irish. Software is becoming a significant export. Reference was made to the quality of our food production and the value it contributes to our exports.

We must send out a message demonstrating the importance of our corporation tax rate to protecting jobs and ensuring future development. If we are to get out of the economic turmoil we are in at present, increasing our corporation tax rate will do nothing to bring that day forward; it will make matters more difficult. That message must be sent out loud and clear to our European partners.

Let me quote the Referendum Commission's remarks on taxation during the recent Lisbon treaty referendum campaign: "The European Council has also made a decision which sets out the effects of the Lisbon Treaty on Irish policy and law in a number of areas: the right to life, family and education; taxation; and security and defence."

Furthermore, it stated:

Ireland's policies on direct taxation cannot be changed by the EU unless there is unanimous agreement in the Council of Ministers. Ireland therefore has the power to veto any such change and the Lisbon Treaty does not change this. The European Council has stated that nothing in the Lisbon Treaty makes any change of any kind for any member state in relation to the powers of the EU in respect of taxation.

That is a very important point.

The debate on this matter has probably become academic. It is important, however, that the Dáil should send out a clear and unambiguous statement in respect of the importance of our corporation tax rate. I would have liked to have referred to the economic uncertainty into which we have been thrown in the past 24 hours. Fianna Fáil's partners in government, the Green Party, have contributed further to the turmoil that exists. We need a general election to provide the certainty and clarity that are required. We will debate that matter on another day.

I commend Deputy Noonan and his colleagues on the Fine Gael Front Bench on introducing this timely motion. The biggest crisis the country faces relates to the fact that 450,000 people are unemployed. The taxation system, whether it be the part which relates to income tax or that which relates to corporation profits tax, is critical to whether people remain in employment, whether new employment is created, whether businesses expand or fold, whether new foreign direct investment is attracted to this country or goes to other EU or global locations or whether existing foreign direct investment relocates elsewhere. That is why it is important this debate is taking place.

It is also important that the House, in the context of the financial straitjacket in which the country finds itself which has led to others coming to our assistance, lays down a firm marker regarding what we believe to be the pillars of public policy that are sacrosanct. The corporation tax rate is one such pillar. It is regrettable, therefore, that the Government saw fit to muddy the waters by tabling an amendment to the motion. At a time when it is seeking cross-party co-operation, it is disappointing the Government has tabled the amendment. Those opposite should reflect on this between now and the vote tomorrow.

There are approximately 240,000 jobs in Ireland that were created and are maintained by foreign multinationals which established operations here. Foreign direct investment accounts for in the region of 70% of total exports, the value of which amounts to €110 billion. The companies involved provide 55% of the total of corporation profits tax paid. In addition, they pay approximately €7 billion in salaries to their staff and are responsible for direct investment in the economy of €19 billion. It is regrettable, therefore, that any uncertainty should hang over this sector at a time when the critical issue is jobs.

In 2008 the OECD carried out a survey and discovered that for every 1% rise in corporation profits tax, there is a corresponding likelihood of a 4% reduction in foreign direct investment. If one considers this in terms of the impact it could have on the economy, it is clear that 10,000 jobs and €5 billion worth of exports would be placed in jeopardy and €400 million in wages and €1 billion in direct investment elsewhere in the economy would be lost. In such circumstances, the stakes are enormously high. Given that 450,000 people, many of whom may have worked in the foreign direct investment sector or in indigenous companies for which corporation tax is critical, are unemployed, I am of the opinion that this is an opportune time to lay down a marker.

I agree with Deputy Noonan that the threat to our corporation tax regime may be more imaginary than real. If our partners, the IMF or the EU in its many guises, are interested in Irish economic recovery, they must recognise that the engine of such recovery must be job creation. Corporation tax is critical in this regard. Rather than the lowest, Ireland has only the third lowest rate of corporation tax in Europe. The average rate across the 27 member states of the EU is 22%. Ireland's rate of corporation tax is 12.5% but there are two other member states with even lower rates. It is important to highlight that fact.

There have been a number of hostile soundings in recent times, especially from France and Austria, regarding the fact that the bailout package should be conditional on an amendment to our corporation tax regime . Such soundings do not necessarily come from critical players in the countries to which I refer but they certainly emanate from those on the fringe. Against that background, we must take account of comments such as those attributed to Mr. Lionel Alexander, managing director of Hewlett Packard, a company which provides approximately 4,000 jobs at various locations throughout Ireland, who stated today that if the corporation tax rate increased, his company would reconsider its investment in Ireland. That is a salutary reminder of the stakes for which we are playing.

There is another matter which we must consider in this regard. If we were to alter the corporation tax regime, what guarantees are there that companies which have located their operations here to avail of the 12.5% rate that applies would relocate those operations to other European countries? There are no guarantees in that regard. The other 26 member states of the EU should take note of that fact. If the companies to which I refer decided to locate to countries outside the EU, there could be significant outflows of capital from all 27 member states. The latter must be borne in mind, particularly in the context of the emerging economies in Asia. India, for example, is turning out more people with PhDs than any other country in the world. Singapore, China and Brazil in South America are all chasing foreign direct investment.

Our corporation tax regime is but one piece of a jigsaw of incentives which make Ireland an attractive location for foreign direct investment. Other such pieces include our educated workforce, recent legislation relating to holding companies, taxation on patent royalties, etc. and double taxation agreements. These incentives make locating operations here very attractive.

It is also important to take the indigenous sector into account. Any interference with the existing corporation tax rate could well be the difference between indigenous companies surviving or going under. These companies are driving onwards, exporting goods and services and are the real engine of our economy in the context of the number of people they employ. We should, therefore, make haste slowly. The House should send out a clear message in that context that our corporation profits tax regime is not open to negotiation.

I support the motion. I agree with my colleagues, Deputies Noonan, Clune and Creed, who stated that it is a shame the Government could not see its way towards supporting the motion and felt obliged to table an amendment. I am reminded of the spider's invitation to the fly: "Will you walk into my parlour?" The Government is seeking our support in respect of the budget on the basis that it is the patriotic thing to do. This is a time for patriotism, for putting the country first and for national solidarity. That is precisely the reason we tabled the motion. We want the national Parliament to send out a clear message to the EU, the IMF, the markets and all potential investors that the 12.5% rate of corporation tax is essential to this country and that it must not be changed because it has been the cornerstone of our industrial policy for some years and is our best hope and probably our only hope of recovery in the context of repaying the kind of debt that now hangs around our necks.

By tabling this motion, Fine Gael wanted to provide certainty, clarity and comfort to those overseas businesses which have located their operations here and which may be considering making further investment in Ireland. We also wanted to provide encouragement to those who are considering investing in this country, especially as it is, I hope, beginning to become more competitive again. It is a pity Fianna Fáil, even as it seeks to spin us into its web by obliging us to accept its budget, in its parlour and on its terms, has reverted to type.

The fact remains that clarity and certainty are still required, particularly if we are not to stem completely the flow of inward investment into this country. Such clarity and certainty are needed very soon, not only in the context of corporation tax but also in respect of all the conditions surrounding the bailout. Fear of the unknown is corrosive to any business. It is obvious from radio and television commentaries that confusion abounds about the role and function of the European financial stability facility, EFSF. Many people appear to believe this facility is great and is similar to a benign uncle who has come from Europe to give us a dig-out.

People have approached me and said that it is great we can borrow again. It probably is great to some extent that we can do so. Being able to borrow does not mean, however, that it will again be party time. Further debt could just prove to be another millstone around our necks. The answer to too much debt, which we now have, is not necessarily access to more borrowing, especially if we do with the money we obtain precisely what we did with our money in the past, namely, pour it into the black hole that is our banking system. If we do that, we simply pile more debt onto the backs of the taxpayers and we will never regain our financial independence.

What are the conditions of access to this contingency fund? We have been told by the Government that the corporation tax rate is not a condition. Perhaps it was never even in question. If it not a condition, what are the conditions? What is being negotiated on our behalf? What will the next Government have to implement? What will we have to administer? When will the memorandum of understanding be published? What are the conditions that are precedent to any aid disbursement?

In the Greek case, the memorandum contained details of the maximum loan, the price, the duration and the number of instalments, but also the targets that were to be achieved and the methods of monitoring the targets and how programme performance would be measured. Also, crucially, it outlined the economic and financial policies that the borrowing country must implement in order to strengthen market confidence and, of course, to restore the financial and fiscal position.

Our objective should be to minimise the amount of borrowing and not regard the EFSF as a crock of gold into which we can dip and which somehow obviates the need for us to get our act together. Before that view takes hold — it will be very difficult for any Government in the future to govern if it does — there is a high price, in terms of cost and conditions, on this money. We want to know what are the conditions and whether they are realistic, acceptable and achievable.

Maintaining the corporation tax rate, which probably was never at risk in any event, is not an adequate negotiating position. I understand for all sorts of political reasons the Government highlighted it as something that might be taken away from us. In the preparation of the memorandum of understanding, if that is not one of the conditions, we need to know what the conditions are.

It is good to get the opportunity to speak and I will be positive, if at all possible. The people in my constituency of Meath East, and those in Meath West, have benefited from the 12.5% tax rate that was given to companies to come in here and they are proud of the homes that they built in my county. Where we have commitments that this will not be touched, it is something on which we must build and we must make a start.

The Government's decision today to flatly turn down my leader's proposal to bring the budget forward has driven many more people in the towns of Ashbourne, Dunboyne, Dunshaughlin, Ratoath, Kells, Duleek, Slane, Navan and in north Meath to make a decision to leave this country. For two long years they have been left uncertain on what will happen and had the Government come out two years ago and told us the truth, our businesses would have survived. I listen to people every weekend and everybody knows that if the position is not stabilised by Christmas, businesses will close en masse. Most say they will get to Christmas.

Yesterday was the worst day in the political history of this country. There were Fianna Fáil Members turning on each other. The Green Party did not know what day of the week it was. There were the two Independents. How dare Deputy Lowry lecture Fine Gael on what to do? Then there was the spectacle at the gate of Dáil Éireann, where every elected Member of this Dáil has been given the freedom to bring in their supporters in a mannerly fashion, not to ram the front gates.

The people of Ireland did not know what to expect today, but I am glad my party leader did what he did. He had the backing of everyone of my party. The Taoiseach behaved like Frank Sinatra once again. He did not even go back to his party to ask would they accept the offer. He just continued to sing, "I will do it my way".

The Government thinks it will get the necessary support for this budget but I, a simple backbencher, will not support it unless the Government puts its cards on the table. My party will not humiliate the elderly or those who have decided to stay at home and helped to build this country.

Normally, on motions like this we try to keep to the substance of the motion.

This is what it is about.

We are discussing the corporation tax.

That is why the people in County Meath stayed at home. It was the corporation tax that allowed companies to come in and invest in this country.

If the Government thinks my party will continue supporting what we saw yesterday it is fooling itself. We want certainty. We should not even be talking about this tonight but the truth could not be told two years ago.

Fianna Fáil and anyone who wants us to support them must start putting their cards on the table. They know their days are numbered. The men of 1916 knew their days were numbered when they took on the rebellion and they gave up their lives for it. The Government has made a disgrace of this country and its people. For once in their lives, they should not run away.

Ultimately, no one really cares about party politics. The Government ought not to look for co-operation and do what it did. My party tabled a motion in the interests of this country and the Government played politics with it again, like it did today.

Like Deputy McEntee, I am disappointed that the Government could not see its way to support this intelligent motion before the House. I am equally disappointed, when the Government looks for co-operation, that it does not give co-operation to this side of the House. The people of Ireland strongly mistrust this Government. My people and those who want to stand by Ireland want to see the back of the Government as quickly as possible.

The country needs hope at this time of appalling economic fallout. Given the air of quiet despair, the citizens need something to cling on to. Much to the surprise of foreign journalists, civil unrest and protest at the decimation of our lifestyle and our future prospects, as individuals and as a nation, have not surfaced to any marked degree despite the fact that we are being provoked by the Government.

Nonetheless, the need for hope of an improved economic climate is paramount. That hope is tied up with the expectation that foreign inward investment will be maintained. However, that will only be possible if the 12.5% corporation tax rate is not increased.

That tax rate has been the carrot that has helped build up a perception of Ireland as a business friendly country, but any attempt to increase the rate would wipe out the gains at the stroke of a pen. Anything that increases the cost base for investors is a blow to our competitiveness. The benefit of any short-term gain to rectify Government fiscal mismanagement would be far outweighed by the long-term fall-out.

Although the 12.5% tax rate has stood us in good stead, our competitiveness is lagging well behind other strongly-performing countries. For example, our labour costs are far higher than those of China and India, which have now overtaken the US as competing locations for Irish subsidiaries.

Ireland's poor infrastructure and lack of broadband roll-out in many areas have been a significant drawback to foreign inward investment. Longford-Westmeath, which has some of the worst roads in the country and has been shamefully let down in terms of broadband coverage and other infrastructure investment, has seen the closure of companies that have relocated to more business-friendly locations abroad. For example, the recent closure of B3 Cables and Campbell Electronics in County Longford, Nexon's in Athlone, County Westmeath and Gannon Concrete in Kilbeggan raise questions about the serious lack of competitiveness engendered by the Government.

The closure of the Department of Agriculture, Fisheries and Food's offices, both in Longford and Mullingar, were a considerable blow to the midland farming community. These closures are a direct result of the lack of infrastructure, high business costs and wage levels. High fuel costs, along with other stealth taxes, have brought about the current economic downturn in the midlands.

Longford-Westmeath has a highly-trained workforce and the number unemployed has now exceeded 16,000. We have been forced to see the closure of businesses, Longford barracks and Granard courthouse which played their part as sources of revenue in the constituency, and were an important part of our heritage. Given the track record of the Taoiseach and his Government, it is laughable that my colleague, Deputy Mary O'Rourke, stated in the House that——

The Government has stated very clearly that the 12% rate would remain. I am surprised that a Fianna Fáil politician still believes the Government hype. We have a huge amount of hype from the Government and I plead with the Minister, Deputy Batt O'Keeffe, to reverse the earlier decision and support the motion before the House. I want to see him walking through the lobbies with the Fine Gael Party. Be a man of the people and stand by the Republic of which he speaks.

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"recognises that:

Ireland, like many other small open peripheral economies, has for many years used its corporate tax policy to encourage economic growth;

the Irish economy now more than ever has to grow its way out of its present difficulties;

the 12.5% corporate tax rate will support Irish economic recovery and employment growth by attracting in particular foreign direct investment;

an increase in the corporate tax rate would reduce foreign direct investment into Ireland and Europe;

if foreign direct investment was lost to Ireland, much of it would flow out of the European Union altogether to other parts of the world, and would inhibit our capacity to grow during the four year plan period and thus reduce our deficit; and

reasserts its absolute commitment to the maintenance of the 12.5% rate of corporation tax."

I wish to share time with the Minister of State, Deputy Dara Calleary, and the Minister of State, Deputy Martin Mansergh.

I thank the Ceann Comhairle for the opportunity to respond to the motion presented by Fine Gael. Normally, I would not agree with an Opposition motion but on this occasion there is great value in this House sending a united message on the importance of keeping our corporation tax at 12.5%.

While our corporation tax is critical, we must also remember that it is but one element of the investment offering that Ireland presents to global markets. Ireland's value proposition to multinationals is strongly based on what we refer to as the four Ts: track record, talent, technology and, of course, our tax regime. Our reputation for excellence in all of these areas continues to attract a strong flow of companies to Ireland. In particular, all of the multinationals I have met have commended our investment in research, development and innovation. No matter what sectors they are in, they all see the potential benefits. This means the Government's investment strategy for science, technology and innovation is the right one to create high quality jobs and to support economic recovery. Despite the period of global recession over the past two years, Ireland's own value proposition to multinationals operating from Ireland has not changed. In fact, it has been enhanced.

There have been significant improvements in Ireland's competitiveness. Building costs including energy, private rents, office rents, services and construction labour have all become far more competitive and they continue to do so. For investors in Ireland, we now offer a greatly enhanced competitive position. The cost of industrial electricity decreased by 24% between 2008 and 2009. Gas prices decreased by 25.9% in 2009 and benchmark salaries for new employees in Irish companies are down between 5% and 22%. Ireland's track record can be seen in the range and quality of multinational companies, many of which have had operations in Ireland for many years.

It is also reflected in the high level of expansions by these companies and in the fact that 80% of our exports are now from the multinational sector. More than 75 multinationals have chosen to make investments in Ireland so far this year. Of these, 22 are from companies new to Ireland, 28 are expansions or new areas of investment from existing client companies and 25 of the investments are in research and development. They could locate anywhere in the EU but they have chosen Ireland. These investment decisions are a vote of confidence in our ability to deal with our financial problems. It is a vote of confidence in what Ireland has to offer to the international investment community. Most of all, it is a vote of confidence in us as a nation and our people.

Our export performance shows that Ireland's enterprise sector, combining multinational and indigenous companies, is the engine of growth in this country. Irish exports continue to perform very strongly, increasing by a total of 3.5% from quarter one to the end of quarter three of 2010. Given global market conditions, it is fair to state that this is a tremendous performance from our key export sectors. An export-led enterprise policy is a whole of economy strategy. Export-driven growth delivers sustainable economic growth through the creation of a virtuous circle which impacts positively on all of the key drivers generating jobs and growth. The boost in secondary employment and the increased consumer confidence which arises as a result of export-driven growth leads to increased levels of consumer spending in the local economy. Increased export growth leads to sustainable direct job opportunities above those provided by serving the domestic market. Growth in revenue for firms beyond what the domestic economy can provide gives increased opportunities for locally trading businesses, a substantial ripple effect in terms of job creation throughout the entire economy and the enhanced tax yields that can ensue for Government.

An export-focused approach impacts on the local economy in other ways also. For example, because export firms are directly exposed to international competition, innovation and high productivity are essential ingredients for success. In turn, they demand high standards from their suppliers, which impacts positively on Irish-based suppliers. It is in this context that it is important to point out that foreign direct investment into Ireland is now back at investment levels that we have not seen since 2005 and 2006. The combined influence of Ireland's increased competitiveness and the strong value proposition commitment to our 12.5% corporation tax rate and quick and decisive measures taken by the Government to combat the challenging economic situation has resulted in this excellent flow of foreign direct investment despite reputational challenges.

These pre-crisis levels of investment hail from our traditional markets of North America, mainland Europe and the UK as well as new high growth markets. On this point, the IDA recently opened offices in Brazil, India, China, Russia and Singapore in order to increase the flow of investment from these growing markets. Given Ireland's strong and long-standing commitment to the 12.5% rate, any movement away from this rate would have a significant negative effect on existing and potential investments.

The Government's position on our corporate tax regime is unambiguous. This commitment is protected in an EU context by the principle of unanimity in taxation matters and is further enhanced by the insertion of a legal guarantee in the Lisbon treaty. Over the past decade, the Irish Government has pursued a consistent strategy of maintaining a low tax burden on companies so as to support sustainable economic growth and social progress. Ireland maintains a low general corporation tax rate by ensuring a wide tax base. The Irish 12.5% corporate rate is a general rate on trading activity and as such is not focused on any particular segment of Irish industry; there is no distinguishing between small and large enterprises or between enterprises that service the local economy and those which have a multinational focus.

The recent independent Commission on Taxation report reaffirmed that a low and stable corporation tax rate should remain a core aspect of Irish tax policy. This view has also been endorsed by the OECD. Its recent work on tax and growth suggests that high corporate taxes are most harmful for growth, followed by personal income taxes and then consumption taxes. Some countries have high nominal rates of corporation tax but much lower effective rates due to the use of various base-narrowing devices. This is not case in Ireland. Our system is relatively simple. Corporation tax receipts in Ireland represent approximately the average collected by such taxes throughout the OECD. Ireland does not support harmful tax competition. We continue to play our part in the EU code of conduct on harmful tax competition and the OECD forum on harmful tax practices. Ireland is fully in compliance with the code of conduct and OECD processes. It is important also to note that the international community does not regard Ireland as a tax haven. The Irish tax system is fully transparent and fully adheres to international norms. This is evidenced by the large and growing network of tax treaties that Ireland has in place with other countries around the world. Ireland has now signed comprehensive double taxation treaties with a total of 61 countries. Our treaty network is rapidly expanding and now includes agreements with non-EU and non-OECD members. Ireland's tax treaties allow for full exchange of information with tax treaty partner countries. Certainty is a key element desired by investors. High corporate tax rates would change company behaviour by disincentivising activity in Ireland and with such an open economy it would be relatively easy for this change in behaviour to translate into a smaller tax revenue base.

An OECD multi country study found that a 1% increase in the corporate tax rate reduces inward investment by 3.7% on average. In other words, it would only take a 2.5% increase in the rate to decrease Ireland's inward investment by nearly 10%. In addition, internationally traded services are an important part of the economy and are expected to grow further as a smart economy develops. It is likely that companies providing services products are more responsive to tax rates and, therefore, will react more negatively to rate increases than companies in the traditional manufacturing sector. It is likely that if the rate increased, some foreign direct investment would choose to leave Ireland. Ireland competes with Singapore and Switzerland for many of its projects and it is likely that these countries would benefit from any change in Ireland's offering to the international investors. It is important to point out that the countries against which Ireland competes for internationally mobile investment continually improve their tax offerings. Any erosion in Irish tax competitiveness enhances the position of competing non-EU jurisdictions. The OECD has pointed out that raising corporate tax is the most harmful tax on economic growth. It is obvious that an increase in the corporate tax rate is unlikely to increase tax revenue in Ireland. While some may argue that an increase in the rate now could increase revenue in 2011, this would be a short-term increase and over the medium term, revenue would be likely to decrease.

Our 12.5% corporate tax rate is a key economic driver in Ireland's recovery and will enable Ireland to meet its external debt obligations. This is good for Ireland and for the eurozone. The Government has set an ambitious target to create 300,000 jobs over the next five years in our new integrated trade tourism and investment plan. This plan will benefit all sectors of the economy and these are jobs at all skill levels, in all sectors of the economy and in every county. Our strategy includes a target of winning 780 new foreign direct investments over the next five years. Our 12.5% corporation rate is central to our ability to attract these investments to the country.

As Minister for Enterprise, Trade and Innovation, I want to reaffirm Ireland's long-standing and long-term commitment to the 12.5% corporate tax rate, which is and will remain a cornerstone of Irish industrial policy.

Does the Minister accept the Fine Gael motion?

I join my colleagues in welcoming the opportunity afforded by this debate to endorse Ireland's position with regard to our 12.5% corporate tax rate. I affirm there will be no change to our corporation tax. It is an absolute red line in terms of any discussions that have taken place. Our corporate tax rate is critical to supporting our economic recovery and employment growth and is a cornerstone of our industrial policy and an integral part of our international brand.

Since the 1950s, Ireland has used its corporate tax strategy to encourage the growth of domestic business and attract foreign direct investment. In 1956, Ireland introduced a zero rate of corporation tax on income from export sales of manufacturing goods. In 1973, Ireland joined the then European Economic Community and maintained its 0% export sales relief until 1980. This was then replaced by a low corporate tax on the manufacturing industry of 10%. In the mid 1990s, the European Commission raised concerns regarding Ireland's corporation tax rates in terms of them being regarded as a state aid. We then instituted a single corporation tax rate of 12.5% on all corporate trading income from January 2003, with a transition period up to this year for existing manufacturing firms to retain the 10% rate.

Our corporate tax system is open and transparent. While there are currently three corporate tax rates, one of which, the 10% manufacturing rate, will be phased out at year end, the clear headline rates of 12.5% for trading income and 25% for non-trading income makes our corporate tax system extremely transparent to those wishing to establish here. Our low corporate tax system does not discriminate based on company size or ownership. It features a low tax rate applied to a wide base and remains a key policy tool for Ireland. Its importance is likely to grow given the weakness of other factors due to Ireland's loss of competitiveness in the boom years and the fiscal constraints imposed by the recession. It is also important to remember that Ireland is geographically and historically a peripheral country in Europe. A low corporate tax rate is a tool to address the economic limitations that come with being a peripheral country, as compared to core countries. Based on the many discussions the Department has with multinational corporations, we believe it is likely that if much of the foreign direct investment that comes to Ireland went elsewhere, it would be lost to Europe in its entirety.

The recent independent commission on taxation recommended that a low stable corporation tax rate should remain a core aspect of Irish tax policy to support economic activity in the long term. Furthermore, recent research by the OECD also points to the importance of low corporate tax rates to encourage growth. The OECD, in ranking taxes by their impact on economic growth, found that corporate tax was the most harmful. In other words, governments seeking additional tax revenues would be advised to consider increasing all other types of tax before increasing corporate tax rates.

It is important to dispel some of the myths surrounding our corporation tax regime. The effective rate of corporation tax is difficult to calculate or compare across countries, but studies indicate that Ireland is one of the few countries in the European Union with an effective rate above the statutory corporate tax rate. The level of corporate tax revenue in Ireland is similar to other EU countries. Corporate tax revenue in Ireland in 2008 was equal to 2.9% of GDP, just above the average for the European Union as a whole, 2.7%, and has been consistently higher over the last decade.

We are committed to doing everything possible to attract and assist foreign direct investment to Ireland. As mentioned, Ireland now has 61 bilateral tax treaties in place, a system of full exchange of tax information and proper regulation of activities to the highest standards.Taxation agreements seek to eliminate and minimise double taxation that might arise forcompanies operating cross-border. The agreements cover direct taxes, which in the case of Ireland are income tax, corporation tax and capital gains tax. These agreements are also key instruments for developing and strengthening economic and trade relations between countries. They reduce tax impediments that might otherwise deter the development of bilateral trading and investment activities. The recent signing of our 61st agreement with Singapore represents a significant milestone and is a reflection of the priority the Government has afforded to the role that international business will play in aiding our economic recovery.

Foreign direct investment in Ireland is significant and substantial and is of critical importance to the economy. In 2008, Ireland was ranked fifth in the OECD in terms of inward investment stock as a percentage of GDP. Equally important, Ireland ranked seventh in the OECD in terms of the relative size of its outward investment. Foreign investment in Ireland is substantial. A recent report ranked Ireland as the top creator of employment, relative to population size, from foreign direct investment. IDA supported companies alone sustain over 135,000 jobs. Multinational companies, both Irish and foreign owned, account for approximately 75% of corporate tax revenue paid in Ireland. This share has been rising during the recession as the domestic focused companies are more severely affected by economic conditions.

The foreign-owned sector is the key growth engine of the economy in 2010. Exports jumped by 7% year-on-year in the first half of the year. The census of industrial production shows that 88% of Irish goods exports are from foreign-owned companies, while the annual services inquiry indicated that 77% of service exports arise from multinational companies. Approximately 255,000 people are directly employed by foreign-owned firms in Ireland. Indirect employment is difficult to quantify because of the knock-on multiplier to consumer spending and suppliers but the statistics suggest it could be as many as 100,000 jobs. As a result, foreign-owned firms account for almost 20% of employment in the economy.

Given Ireland's strong and long-standing commitment to the 12.5% rate, any movement away from it would impact negatively on investment and employment. Certainty is a key desire for investors and any change of policy would result in increased uncertainty about the future direction of the Irish economy and its attractiveness to foreign investment. Changes to the corporate tax would be likely to have negative long-term consequences.

Estimating the size of the behavioural effects is very difficult but they are significant. An OECD multi-country study found that a 1% increase in the corporate tax rate reduces inward investment by 3.7% on average. In other words, it would take only a 2.5% increase in the rate to decrease Ireland's inward investment by nearly 10%. As the 3.7% figure represents an average across a number of countries, it is likely that the effect on Ireland would be greater in magnitude. Several important factors in the Irish economy influence this figure. The impact of a rate increase would be likely to be greater if the baseline tax rate is low initially. Research on this topic suggests that corporate tax rate increases would have the largest impacts on investment in low tax locations. The asset mobility of companies is an important determinant of responsiveness to tax changes. Companies in Ireland that have invested in mobile assets are more likely to react to tax rate increases. In general, companies involved in services production tend to be more sensitive to tax changes because they have lower capital requirements. A rate increase would, therefore, more severely impact services than manufacturing. Services companies are more likely to generate jobs in the future as Ireland moves towards a knowledge economy but these jobs would be endangered by an increase in the corporate tax rate. All the evidence on the corporate tax base in Ireland suggests that the responsiveness of Irish-based companies is probably greater than the 3.7% average figure presented by the OECD.

Our 12.5% rate is our salient competitive advantage. Meddling with it would reduce potential GDP growth, adversely affect employment and reduce the economy's debt servicing capacity. Corporation tax has been the best performing portion of Irish tax revenue this year. It is22%, or €473,000, ahead of target and it has accounted for 11% of total tax revenue thus far this year. Multinational companies account for at least half of total corporation tax receipts. Ireland proved that by dropping the rate and providing certainty that it was fixed, we could attract further investment and boost revenue. By changing the rate, even slightly, investment would quickly depart and revenue would fall.

I do not believe that our European partners see our recourse to the programme of support from the EU and IMF as an opportunity to exploit control over what are essentially domestic issues. A number of European prime ministers have already acknowledged the impact such a move would have on our long-term recovery. Ireland's historic, cultural and demographic ties with the US and other markets are key compensators for our peripheral disadvantage. To meddle with the 12.5% rate would be counterproductive and deny us a key plank of our recovery strategy. That is why this Government is committed to its retention and I appreciate and welcome the cross-party support for this position.

The current corporation tax rate reflects the evolution of policy over 50 years. If I recall correctly, export sales relief was introduced by the interparty coalition in the mid-1950s in the form of a tax exemption for exporting companies. Subsequent to our entry to the EEC, it became a 10% rate in 1980. Questions later arose about whether the rate discriminated between companies and in May 1997, the then Minister for Finance, Deputy Quinn, announced the aim of the 12.5% corporation tax rate. That aim was not achieved for five or six years because the rate for indigenous companies had to be reduced from its original rate of approximately 20%.

Given that we gained EU approval for our approach in 1998, nobody can describe it as unfair competition. Over its 50 year lifetime, the policy has in fact seen increases rather than decreases. It is a cornerstone of our very successful industrial policy. In the 1950s, Ireland was perceived as an overwhelmingly rural and non-industrialised country. With the advent of the Single Market and the eurozone, our corporation tax rate has been one of the principal means of catching up with and possibly overtaking average EU living standards. It has enhanced our competitiveness and is a cornerstone of initiatives like the IFSC.

During the past two or three years, our exports to the US were greater than to Britain. My favourite historical quotation is the following statement by Thomas Addis Emmet to a parliamentary committee in 1798: "America is the best market in the world, and Ireland the best situated country in Europe to trade with that market."

We are at present speaking about a headline rate. Other countries with ostensibly higher taxation rates may in fact have lower effective rates but skilled accountants are required to take advantage of their complicated and voluminous tax books. The Minister of State, Deputy Dara Calleary, described the 12.5% rate as a key compensator for regional disadvantage. The City of London, for example, does not need a tax rate of 12.5% because it already attracts significant financial investment. Similarly, the German economy has many compensating factors as one of the world's leading exporters.

People have asked what harm would be caused by increasing the rate by 2.5%. However, the central issue is not whether companies could bear a higher rate but if faith in this country would diminish. During the mid-1970s I was posted to Germany, where one of my duties was economic reporting. During my time in that country I realised the importance of reliability and trust. When a Government commits to a policy, it must stick to it. This is particularly true in the area of tax and investment. I have heard through private sources information that there would be firms, high profile ones at that, which would leave the country very quickly if they could not rely on the public faith we have committed to the tax rate.

This was copper-fastened in the Lisbon treaty. If there are officials in other countries who look enviously on this, particularly in the most prosperous and successful countries, I urge on them the moderation that has served them so well — I am thinking in particular of Germany's position in recent decades. It would be very damaging to its interests, let alone ours, to try to press a temporary advantage so as to take the floor from underneath our economy. I am sure that on reflection neither its Government nor any other Government will want to do something that, in the final analysis, as we are all part of the one eurozone, would only compound the problems of other countries as well.

I wish to share time with Deputy Ó Snodaigh today and with Deputy Penrose tomorrow.

Is that agreed? Agreed.

Given Ireland is now engaged in this pretty awful process of having to be bailed out or dug out by at least three international organisations, the European Central Bank, the European Commission and the International Monetary Fund, together with a number of individual countries such as the United Kingdom and Sweden which have offered bilateral assistance to Ireland, it appears there is a list of conditionalities being prepared by many of these organisations. One of the conditionalities which has been suggested as being on the list is that in some way or other Ireland might be forced to give up the 12.5% rate of corporation tax levied on company profits in Ireland as though the fact we are getting a bailout means that this would be an appropriate payback in regard to something which has acted as a particular driver of investment in Ireland. The suggestion is this has been to the detriment of others in the member countries which are involved in assisting us in our difficulties with our banks. It is useful that we have a discussion on this issue, and I thank the members of Fine Gael who have moved this motion.

The issue of tax on company profits is not simply a matter of headline rates. Even if it were a matter of headline rates, the Irish rate is not so out of line as is sometimes suggested by people who might not have actually looked at the situation in detail. Headline rates are not the important issue, which is the effective rate of tax, including the treatment of dividends and also including the important issue, which does not get counted in corporation tax, of the level of subsidy which can be made available by countries trying to attract mobile international investment.

The other major issue in regard to Ireland and other countries is that of write-downs, particularly for depreciation on plant, machinery and buildings, and also, nowadays, of research and development or in regard to work that involves the creation of patents and patent rights and entitlements. What is interesting is that in terms of the OECD statistics, the corporation tax revenue to GDP ratio in Ireland in 2006 was 3.8 and in the EU-15 was 3.4. The figure for Ireland was 3.5 in 2001 and 3.4 for the rest of the EU-15 in the same year, and for Ireland it is 2.7 this year. Therefore, the suggestion that Ireland is way out of line is not necessarily correct.

When one considers the treatment of depreciation in regard to writing down buildings, plant and machinery and so on, Ireland is at the more conservative end of the depreciation range. Ironically, countries such as Denmark, Sweden and Belgium grant far more generous terms according to the OECD information on write-downs in regard to depreciation. It would helpful, although difficult to achieve, if we had an accurate picture of what the effective tax rates, dividend treatment, write-downs such as depreciation and write-downs of investment in research and development are in all the different countries because I suspect the real picture is a little different.

Some are very critical of the low Irish corporation tax rate. The Minister of State, Deputy Mansergh, has just pointed out that the Irish treatment of corporation tax as an attractor and generator of foreign direct investment goes back to the late Deputy Gerard Sweetman in the Fine Gael Government of that time, if I remember correctly.

It was the inter-party coalition.

He was the Minister for Finance in the 1950s, when there was the development of the world famous concept of the Shannon free airport development area and the notion of tax-free zones as a way of developing in countries which otherwise lacked employment specific areas where foreign investment would be attracted and would not be troubled too much by local tax rates because they were exporting the product. In 1981 a 10% rate of corporation tax was introduced for manufacturing. Following European Union approaches on the issue, in 1997 the then Labour Party Minister for Finance, Deputy Ruairí Quinn, introduced a 12.5% corporation tax on trading. This was followed in 1999 when the then Minister, Mr. Charlie McCreevy, confirmed in the Finance Act the negotiation with the EU partners of a 12.5% rate. This was agreed by the EU because there had been a tradition of generating employment in Ireland through export sales relief. In those days, much export sales relief effectively equated to a zero rate of corporation tax. Therefore, the 12.5% rate being introduced effectively brought about a higher rate of tax on foreign multinationals in Ireland while offering a lower rate of tax to companies in Ireland, such as domestic banks.

The critics of the Irish lower corporation tax rate often characterise it as a race to the bottom or fiscal or tax dumping, whereby foreign investment will be attracted to countries with the lowest rates. This is said to represent fiscal dumping by that country against other countries which would otherwise compete more successfully to get that investment. In the way international mobile investment has developed, that is now quite out of date. I understand the grievance many people feel. If an ordinary worker is paying low rate income tax of 20%-41% why can corporation tax not be at the same rate? It might be said looking for that would be a case of cutting one's nose to spite one's face.

The argument for State intervention for a low rate of corporation tax in Ireland is based on two grounds. The first is the market failure which followed the Act of Union when manufacturing stopped here, through to the Great Famine, the land wars and Irish independence, when we could not produce enough employment to keep our people at home and therefore looked for an attractor for foreign direct investment. I say to our European friends that, unfortunately, the same need continues. Irish capital has not generated worldwide firms that maintain their employment in Ireland. Indeed, it exercises an enormous tendency for such firms to disinvest in Ireland and go abroad. A second issue is what economists call asymmetry. The biggest asymmetry for Ireland, I say to our European friends, is that we are a small island out in the Atlantic rather than in the core of countries at the heart of the European Union which share a common mainland and therefore have much lower costs. We need some kind of measure in order to get over our historical difficulties of market failure in regard to capital and because we are a peripheral country. Other such countries require the same consideration. The fact that we have an element of advantage in regard to corporation tax makes the playing pitch more even. I would also point out to our European friends that the fact that Ireland has an attractive corporation tax rate may assist foreign investment in other European countries because foreign corporations — which call themselves global corporations nowadays — rather like that situation.

U2 is a world famous band whose example is one I pose to our European friends. The band had, and has, all the advantages of artist tax relief on its copyright here. However, for organisational purposes the band moved many of its activities to Holland which, on the surface, is a very high-tax country. I pose the U2 conundrum. Why is it more attractive for U2 to move many of its activities to Holland for tax purposes, despite apparently enjoying such enormous advantages in Ireland? These include not only the 12.5% corporate rate but the extraordinarily attractive treatment we have for intellectual and cultural works of art, the band's songs included, which are copyrighted here and sold on. Our foreign friends should consider that.

I call An Teachta Aengus Ó Snodaigh. The Deputy has ten minutes but the House will adjourn at 8.30 p.m.

Tuigim sin. Ba mhaith liom mo bhuíochas a ghabháíl le Páirtí an Lucht Oibre as an am a roinnt liom.

On this question James Connolly once used the phrase "ruling by fooling". He would certainly have had plenty to justify that thought in the midst of the comic opera farce which is the hallmark of the dying days of this Government. He would also perhaps be tempted to coin a new phrase — Opposition by fooling. Fine Gael and the Labour Party are attempting to fool the people into believing they are outraged by the current Administration's plans to savage the Irish people in the interests of its banker and speculator friends. The truth is the parties have accepted the timetable for reducing the deficit and have also accepted the need for massive cutbacks which will be borne by the ordinary people of this State. They may argue about whether the cuts should be of the order of €6 billion or merely €4.5 billion and may express outrage at control of the country's finances being handed to the IMF. They may castigate the Government which has been responsible for that outcome. However, when the smoke clears they, too, have signed up to the consensus for cuts. They, too, have expressed their willingness to act as the executive arm of the IMF. Whatever theatre is being acted out between the parties has merely to do with which one of them will have the biggest number of seats in the future coalition that will administer the cuts when the present sorry bunch shuffle off the stage.

When Fine Gael and Labour Ministers come to close schools, sack nurses and cut the minimum wage, of course we will be told how much better they do it rather than Fianna Fáil or Green Party Ministers doing the same. They will do just as they did when they were in government during the 1970s and 1980s. It is puzzling, in the midst of the current turmoil when inspired leaks hint at what the budget has in store for us, that Fine Gael, using this Private Members' time, should hone in on the issue of corporation tax. We are told that the minimum wage will be reduced, people's homes will be taxed, we will have to pay twice for our water, social welfare payments will be cut and thousands of public servants will be thrown on the dole. One would imagine that Fine Gael might regard these as issues of major concem and an appropriate subject for Private Members' time. Most people certainly would assume they were. However, to do so would be hypocritical as that party has already indicated it will do the very same thing——

The Deputy is drifting somewhat from the substance of the motion.

I am sorry but I am putting it in context. The motion concerns corporation tax and why it is or is not appropriate to discuss this matter today. I am setting that context, pointing out it is hypocritical to continue in that line when the party has indicated it will do the same or worse when it is in power.

In regard to taxation or any other aspect of domestic economic policy my party will not accept being dictated to by the IMF or the EU. That includes not being forced to increase the rate of corporation tax. My party is the only party which is consistent on that issue because we are the only party in this House which is not willing to implement anything the IMF tells us to. We are also the only party in the House that opposed the Lisbon treaty which surrendered further control over this State to Brussels. In fairness, that appears almost irrelevant in the context of the current abject surrender to the IMF.

Is Fine Gael telling us it is acceptable for the IMF and the EU to tell us to sack thousands of workers or sell off State assets but not to raise corporation tax? Clearly, that is what it says. Does the Labour Party agree with Fine Gael on that point? If not, how will that party resolve the issue if and when it is in position on the other side of this House? Will the Labour Party use the excuse it has been placed in a straitjacket and has no choice but to do beastly things to the people who elected it?

We oppose all diktats from the IMF and Brussels that have to do with destroying our public services or raising corporation tax. In that we are at least consistent. As far as I am aware, no party currently advocates raising the rate of corporation tax. Why waste time in the middle of an unprecedented economic calamity having all of us say what everyone knows already? Perhaps there is a reason but it does not lie in this House. It may lie in the north west of the country where a by-election is being held. I say that only because in announcing this motion Deputy Kenny specifically asked my party to state what our position is on corporation tax. All he had to do was ask our good friend Google who would have told him exactly what our policy is. He might even have picked up the telephone and put the question to my office or to the office of any of the Sinn Féin Deputies. How much help that would be to Deputy Kenny's candidate in Donegal South West is another matter. The motion is a red herring and was such when Deputy Kenny raised it. If it was tabled in an attempt to score political points or to influence the electorate it was misplaced and badly researched. It is also a bizarre topic on which to base a debate in the current circumstances. No party here advocates increasing corporation tax and in the context of what is coming down the line it is hardly the most pressing issue.

Much has been made of the part the tax rate has played in attracting overseas investment. That is fair enough. However, perhaps we ought also to reflect on the reasons the tax exists in the first place and why this State has become so dependent on overseas investment. The reasons have to do with the historical failure of those in this country who have real wealth to invest it productively here. Anyone familiar with the economic history of this State between the 1920s and the 1950s will know successive Governments beat their heads against a stone wall in attempting to get the so-called Irish capitalist class to invest in manufacturing in this country. This was at a time when a huge proportion of the assets held by the Irish banks were invested overseas and through the London Stock Exchange. At one stage Seán Lemass accused them of ritual economic treason. What would he say today if he was here and what would he think of his party's capitulation to the very same traitors? When he went out on the morning of Bloody Sunday, 21 November 1920, with the Dublin brigade of the IRA, did he ever conceive that one day a so-called republican party would indenture the Irish people in the interests of those economic traitors, as my good friends, the Garda, has called them?

It was the anti-national refusal of those banks to invest in Irish development that persuaded Lemass to seek overseas investment. That is why we have the current taxation structure and why it is necessary. It was the anti-national behaviour of the banks and major speculators which landed us in the current mess. While the productive base of our economy was largely driven by overseas capital, such people were gambling in property and finance.

Debate adjourned.
Top
Share