I welcome the Minister of State, Deputy Richmond.
Nithe i dtosach suíonna - Commencement Matters
Business Supports
I welcome the Minister of State. Today, is my first opportunity to welcome him to the Chamber since his elevation to his new post. I congratulate him and wish him well, particularly as I know how committed he is to enterprise and business.
I am concerned about businesses, especially small businesses. I tabled my Commencement matter before the announcement of the supports that were put in place yesterday. I am concerned that businesses were very slow to apply for the temporary business energy support scheme, TBESS, because many business owners found it very prohibitive and uptake was quite low. I believe that businesses are not aware of many other available supports. That is why I ask the Minister of State to outline the supports that will be in place for businesses for 2023, especially the hospitality business.
I welcome the fact that the 9% VAT rate has been extended until the end of August. I know that the Government cannot continue to keep providing support. I thank the Government for the supports that have been put in place. However, I feel that it is really important to convey the message that supports are still available and I would appreciate if the Minister of State outlined them.
I sincerely thank Senator Byrne for raising this really important issue. It is particularly pertinent given the Senator's personal experience as a businesswoman in Limerick for many years as well as her parallel political career that is continuing to thrive.
I think we can all agree in this House today that we all want to see SMEs succeed. SMEs are the backbone of our economy. Small businesses have been through so much over the past few years, from Brexit to Covid and now this energy crisis. Having supported businesses through the first two crises, the last thing we want to do is see this crisis become the final straw.
As Senator Byrne mentioned, TBESS was introduced in budget 2023 as a major way to support SMEs and businesses of all sizes through this energy crisis. When I entered the Department in January it became clear that the scheme in its current form was not working for businesses. There is a budget of €650 million for this scheme and we really want to see it spent. Where the scheme was not working, we committed to addressing this.
I engaged with businesses both on a departmental level and on a local level where the same suggestions cropped up repeatedly. Yesterday, we saw these points taken on board with the announcement of an updated TBESS. Now businesses will have to show a 30% increase in their bills rather than a 50% increase, and they will receive up to €15,000 per month rather than €10,000. For businesses with multiple locations, they can now receive up to €45,000 per month. We have also secured funding for access to finance measures, including the growth and sustainability loan scheme and the Ukraine credit guarantee scheme. In addition, and as mentioned by the Senator, the lower 9% VAT rate for the hospitality sector has been extended until August. These are two very clear and tangible ways we are supporting SMEs across Ireland, and reacting to the situations with which they are faced.
On a wider level, our plans to support SMEs now and up to 2030 are laid out in the White Paper on Enterprise, which was published in December. The White Paper sets out our vision for businesses based in Ireland, and how they can succeed and find a competitive advantage while staying sustainable, innovative and productive. This goes hand in hand with their roles in supporting jobs across the country be it Limerick, Cork or, indeed, Dún Laoghaire. As such, in the White Paper there are several priority enterprise objectives which include decarbonisation, promoting the digital transformation, advancing trade and our foreign direct investment, strengthening our exports, stepping up enterprise innovation and building on our existing strengths. It is particularly important to mention exports because, as we saw again yesterday, there have been record figures in our exports over the last number of years despite the onslaught of the pandemic.
More widely, these are areas in which we can do more for small businesses. Access to finance is a big area where we know we can and must do more for SMEs that want to start up and scale up. Additional supports for SMEs include the expansion of the local enterprise office, LEO, network to support businesses of up to 50 employees as opposed to ten, thus helping SMEs with productivity challenges, enhancing skills and capacity building, and promoting innovation.
The success of SMEs is directly linked to the success of our economy. I have made it a priority in my role to meet businesses, hear their concerns and take their concerns on board, and feed that back to improve outcomes where I know we can.
The Senator has invited me to visit businesses in Limerick in May and I very much look forward to doing so. I hope we can meet businesses across Limerick city, many of whom we have frequented and been patrons of before in personal as well as political capacities. I am keen to address these challenges, talk them through it and, in many cases, to speak with businesses and let them know about the very many supports that are on offer from the Government and the State agencies.
I thank the Minister of State for his comments. I thank him for accepting my invitation to visit Limerick. I am a former business owner. I work with many small business organisations. Certainly, the Limerick City Centre Business Association is doing Trojan work in supporting small businesses. While they are in competition with one another, they work together for the greater good.
I welcome everything that the Minister of State has announced but I believe we need a commitment as well.
I acknowledge the reduced VAT rate has been extended until August and the supports will be in place for quite a while, but we need a commitment to monitor how businesses are doing. The last thing we need following Brexit, Covid-19 and the Ukraine war, is for businesses to feel they are being abandoned. They are grateful for all the Government has done but it is important that going forward to keep an eye on how businesses are doing because many small businesses have closed and that is a real concern for me. I thank the Minister of State for his commitment.
In conclusion, my Department, the Minister, Deputy Coveney and myself are committed to supporting businesses of all sizes throughout Ireland, but we are acutely aware of the impacts on smaller businesses. As I have mentioned, we have done a lot of work in this regard and we have made much progress, but there is always room for more. Crucial to that is the ongoing level of engagement and monitoring, not just with the representative bodies and the trade associations, but individually with businesses. There is an important role for public representatives be they in this House, the Dáil, the European Parliament and on our city and county councils across the country to feed into that level of monitoring. It is important when we look at the work that has been done by the Government that we look to the White Paper on enterprise and how it is being implemented. That will provide us with the pathway to lay out exactly what can be done.
My closing point is to stress that support is in place for businesses from the LEOs to Enterprise Ireland to government supports. Help is there for those who need it, but it is important that we all take that responsibility in this House and beyond to be the bridge between the Government and the businesses in our communities.
Local Authorities
I welcome the Minister of State, Deputy Heydon, to the House.
The Minister of State is welcome and I thank him for taking this. I know the Minister of State, Deputy O'Donnell, is indisposed this morning, but he is aware of this issue. In 2014, as the Minister of State, Deputy Heydon, will also be aware, the Local Government Reform Act was passed. It abolished town councils throughout Ireland. That is probably a debate for another day, but when the town councils were abolished, they were replaced with a different decision-making structure, which was done through municipal districts. They exist in every county, except Dublin, because there were no town councils in any of the four Dublin local authorities, except for Balbriggan, where the town council was abolished and not replaced. There were no town councils in the Galway City Council or Cork City Council areas either. None of those six local authorities, therefore, got municipal districts.
It is a problem for the six local authorities - Dublin City Council, Dún Laoghaire-Rathdown County Council, South Dublin County Council, Fingal County Council, Galway City Council and Cork City Council - because decisions cannot be devolved to municipal districts and, therefore, every decision has to be made by the full council. This is a major block to the efficiency of decision-making within the local authority. If one was in Kildare County Council, for example, there is a municipal district in Athy and the decision can be made at a local level to do something and the full council has the power to devolve certain decision-making powers to Athy municipal district. That makes sense because rather than the councillors in Athy having to go back to the full Kildare County Council to ratify a decision, they can make that decision locally where they have the expertise, knowledge, local stakeholders, etc. That cannot be done in Dún Laoghaire, for example.
Within the local authorities such as Dún Laoghaire-Rathdown, there are area committees. These are important committees that sit for four hours per month, twice a month, on the first and third Mondays. There are two area committees within Dún Laoghaire-Rathdown, with Dún Laoghaire on one side and Dundrum on the other. However,, if the Dún Laoghaire-Rathdown area committee decides to do something, they have to go back to the full council to make a decision on it, which means that there is further debate on it. There is a possibility that the area committee will be overturned by the council, although it is uncommon. Whatever happens, the few hours that the council has to meet every month is bound up in discussing matters that could have been decided at the area committee but because the area committee is not a municipal district committee, it cannot make those decisions. It seems that when the 2014 Act was passed, there was a gap in what was put in place to fill the places of town councils around the country, but not in these six local authorities. It means that decision-making is not streamlined in urban local authorities such as in Dublin, Cork and Galway. The reality is, therefore, that it restricts the ability of councillors to do the work, and it takes away time allocated to the overall council's business every month.
I am asking for the Department of Housing, Local Government and Heritage to actively look at putting municipal districts into those six local authorities to replace the area committees. It is an efficiency measure, it is a fairness measure and it is also a subsidiarity measure. It will allow decisions to be made at the most local level possible and, to my mind, it makes absolute sense. I am hoping the Department will be well-minded about that decision.
I thank the Senator for raising what is an important issue. He articulated it in terms that I can understand. When he started referencing Kildare and municipal districts, I could see the benefit of municipal districts and how they have worked well to streamline the decision-making process, so I can understand his frustration.
On behalf of my colleagues, the Minister of State, Deputy O’Donnell, and the Minister, Deputy Darragh O’Brien, I wish to provide an update on the issue to the House. Unfortunately, the Minister of State, Deputy O'Donnell, is unavailable to take this commencement matter. The system of municipal districts for sub-county decision-making was introduced, as the Senator knows, in the Local Government Reform Act. These reforms provided for the dissolution of 80 town councils and the establishment of 95 municipal districts. This was intended to address anomalies of the previous town council system, such as the lack of sub-county governance in rural areas and in larger towns without town council status. Municipal districts were also designed to improve integration between towns and hinterlands. Municipal districts were not introduced in the four Dublin local authorities or for Cork or Galway city councils, because the new system replaced town councils and aimed to extend sub-county governance to rural areas.
Introducing this system in urban local authorities would represent an additional element of local administration at variance with the aim of rationalisation and efficiency underpinning the reform programme. Instead, local area committees operate in a similar manner to municipal districts, notwithstanding the points the Senator raised regarding the difference between both of them.
I am informed that extensive consultation on municipal districts and area committees took place with the local government sector throughout 2021 and into 2022. From this process, a circular on best practice on the operation of municipal districts issued to local authorities at the end of 2022. It makes recommendations on the performance of reserved functions; modes of delivering services to the public and greater highlighting of these; promoting economic, social and cultural regeneration; development of their rural towns and hinterlands; enhanced training and development opportunities for members; and logistical arrangements to allow for the smooth operation of municipal districts.
A survey of elected members and local authority executives sought views on the operation of area committees and was followed by a series of workshops with elected members, officials and representative bodies to get more in-depth feedback. Further engagement will follow to progress matters raised and examine options to further enhance local government. The programme for Government established a citizens’ assembly to consider a directly elected mayor for Dublin, as the Senator will be aware. The assembly reported last month. Once considered by Government, the report will be passed to the Oireachtas and will be further considered by a joint Oireachtas committee, which will provide views to the Houses for debate. I understand that detailed consideration of the report has commenced within the Department of Housing, Local Government and Heritage.
Finally, the forthcoming local government (directly elected mayor) Bill 2023 will, inter alia, provide for the holding of plebiscites for a directly elected mayor of the administrative area of any local authority. Each of these processes could have a fundamental impact on the structures of local government and would, therefore, inform any future changes in respect of area committees or municipal districts, which would have to be considered.
I regret that the Minister of State has been given an answer to read out that substantially does not address the issue I have raised. Not only do area committees operate in a similar manner to municipal districts, they do exactly the same work.
They do it without recognition for the status of that committee, without recognition for the chair of that committee and without the power to make decisions. It is desperately wasteful. All the chat about directly elected mayors is fine but it is entirely separate to the issue I am raising.
I do not understand why the Department cannot bring this forward. It is not something that needs to go to a citizen’s assembly or that requires significant consultation. It is a matter that can be fixed legislatively and if needs be, I will bring forward a Bill on it. The reality is that there are six local authorities around Ireland that do not get to do their business in an efficient way because the Department has hamstrung them by denying them the opportunity to have municipal districts. Will the Department respond to that, not with talk about directly elected mayors but with answers that will deliver for local communities in urban local authorities in Dublin, Galway and Cork?
I appreciate the points the Senator made and I accept his frustration in that regard. In each of the Dublin local authorities and on Cork and Galway city councils, where area committees exist, decisions can be made in local areas but, as he pointed out, those decisions have to then be brought forward to the council for further discussion. He made his point well on subsidiarity. We know about area committees and recommendations in practice. No more than when a local matter is discussed at full council, councils tend to look to local area representatives for their views and that tends to inform the view. However, that leaves it open to issues where someone in the north of a county such as Kildare could vote a certain way against a decision that impacts people in the south of the county, and that would not be particularly fair.
I understand the concern the Senator has about bringing that back and I will bring back the points where he outlined how he feels it is not efficient. The response I have tells me there has been a lot of consultation and I take that on board but the system of local area committees is similar to municipal districts and provides for local issues to be addressed in an efficient and effective way. Any change to the operation of area committees must consider the type of directly elected mayor and local government structures best suited to Dublin and other cities in the future. I know that is not the response the Senator wants to hear and I know he believes those are two separate things but that is the point and I will bring back to the Minister of State, Deputy O'Donnell, and the Minister, Deputy Darragh O'Brien, the views articulated today.
Before I go on to the next speaker I would like to welcome the students from Shanganamore National School in Athy. They are welcome, along with their teachers, and I hope they enjoy their visit to Leinster House.
We even gave an obligatory mention to Athy because they are here.
Legislative Measures
Gabhaim buíochas leis an Aire Stáit agus maidin mhaith dó. Tá áthas orm gur tháinig sé os comhair an tSeanaid chun an t-ábhar seo a phlé. Chuir mé an ní i dTosach Suíonna seo faoi bhráid an tSeanaid mar go bhfuil deis iontach ann don Rialtas céim a ghlacadh i dtreo chomhionannais sa Stát seo. Tá oidhreacht an-bhródúil ag an iar-Aire Sláinte, an Tánaiste, an Teachta Micheál Martin, leis an gcosc ar thobac a chaitheamh taobh istigh. Léirigh sé ceannaireacht iontach agus leanann an dea-shampla sin i go leor tíortha ar fud an domhain.
Tá an Rialtas seo le moladh go hard as an bplean ceannródaíoch le lipéadú a chur ar alcóil amach anseo. Molaim an tAire Sláinte, an Teachta Stephen Donnelly, go háirithe mar tá sé ag brú ar aghaidh leis an mbeartas seo, i gcoinne bhrú ó thairgeoirí alcóil agus ó thíortha Eorpacha eile. Cosúil leis an gcosc ar thobac, breathnófar ar an gcur i bhfeidhm ar an gcóras lipéadaithe seo go hidirnáisiúnta. Tá gach seans ann go leanfaidh tíortha eile muid amach anseo. Nach mbeadh sé iontach, nuair a labhrófar i dtíortha eile faoi fhorásacht an Rialtais, go bhfeicfeadh siad Rialtas na hÉireann agus an tAire Sláinte ag úsáid na Gaeilge go feiceálach agus go bródúil. Is tír dhátheangach muid agus nílimid cúngaigeanta. Tá deis iontach ag an Rialtas an teanga álainn a úsáid agus a chur os comhair an domhain mhór. Tá sé fíorthábhachtach go n-aithnítear an dhátheangachas sa Stát. Tríd céimeanna mar sin, tá an Rialtas ag normalú úsáid na Gaeilge sa tír seo. Tá sé sin an-tábhachtach ó thaobh cuir chun cinn na teanga as tír.
Teachtaireacht cumhachtach a bheadh ann don phobal labhartha na Gaeilge sa tír seo má gheallann an tAire Stáit go dtabharfar lipéadú dhátheangach le heolas sláinte poiblí ar alcóil. Déantar lipéadú ar fud na hEorpa agus ar fud an domhain i níos mó teangacha ná aon teanga amháin, agus ní chuireann na lipéid mearbhall ar an bpobal. Tá rogha dhátheangach ar thoitíní in Éirinn le blianta fada anuas agus ní chuireann sé sin mearbhall ar dhaoine ach an oiread. I dtaighde ó Millward Brown, léiríonn 63% de na daoine a cuireadh suirbhé orthu go bhfuil siad ar son lipéadú dhátheangach, agus níl ach 10% ina gcoinne. Is féidir liom na sonraí de sin a sheoladh ar aghaidh chuig an Aire Stáit chun breathnú orthu.
B'fhéidir go bhfuil cuma beag ar an scéal seo ach téann na rudaí beaga sin go mór i bhfeidhm ar phobal labhartha na Gaeilge. Cuireann sé leis an méid a dhéanann an Rialtas in áiteanna eile an Ghaeilge a chur chun cinn agus an teanga a spreagadh ar fud na tíre. Táim ag súil go mór le ráiteas dearfach ón Aire Stáit.
Before I call the Minister of State I would like to welcome the students from Glenageary Killiney National School. They are sixth class students and they are guests of Senator Ward. They are accompanied by Councillor Anna Grainger and some of their teachers. I hope they enjoy the debate.
I wish the students good morning and it is great to have them here. On behalf of the Minister of State, Deputy Naughton, I wish to thank Senator Clifford-Lee for raising this matter. I agree with her point that this is not a small matter and that it is important to people looking at it. In every debate we have to have little bit of balance and talk about all the impacts such a decision would have and I might address that in my response. I take on board that this is an important matter.
The Public Health (Alcohol) Act 2018 was designed to address the harm that can be caused by alcohol consumption. According to data from the Global Burden of Disease study, an estimated 4.8% of our deaths and 5.2% of our disability adjusted life years were attributable to alcohol in 2019. The primary policy objectives of the Public Health (Alcohol) Act 2018 are: to reduce alcohol consumption to 9.1 l of pure alcohol per person per annum; delay the initiation of alcohol consumption by children and young people; reduce the harms caused by the misuse of alcohol; and regulate the supply and price of alcohol to minimise the possibility and incidence of alcohol related harm.
The Act introduces a suite of measures to contribute to a reduction in alcohol consumption and health harms, including: the regulation of advertising and sponsorship; the display of products in mixed retail outlets; and health labelling. Section 12 empowers the Minister for Health to make regulations on the labelling of alcohol products. Under the section, the label of an alcohol product must display the quantity of grams of alcohol in the product and the number of calories. In addition, a label must display: a warning to inform young people of the danger of alcohol consumption; a warning to inform people of the danger of alcohol consumption when pregnant; a warning to inform people of the direct link between alcohol and fatal cancers; and the address of the HSE website, AskAboutAlcohol.ie, which gives information on alcohol and related harms.
The section also requires that the same health warnings and information on the HSE website must be on notices in licensed premises and displayed on websites which sell alcohol. In the case of the notices in licensed premises and on websites, the information must be in both the Irish and the English languages, whereas the information on labels is required in the English language only. During the passage of the Public Health (Alcohol) Act through the other House in 2018, there was a debate on whether the information on labels should be in both the Irish and the English languages. In that debate, the then Minister for Health set out that the requirement for information on labels is a new obligation that is being placed on commercial operators and that the intention was that this obligation should be proportionate. The new requirements will move Ireland's alcohol labelling from a position where there is no health information on the product to one where there will be six new pieces of information to display on the label. In order that the obligation on commercial operators would be as minimal as possible, but still achieve its required effect, it was discussed and ultimately agreed in the Dáil that the Irish language requirement would not apply to these labels.
Tá an-díomá orm an méid sin a chloisteáil ón Aire Stáit. Tá sé seafóideach mar déanann tíortha eile, ar nós Ceanada agus gach tír eile le dhá theanga, an méid sin gan aon fhadhb. Tá sé maslach amach is amach má chloínn an Rialtas leis an gcinneadh sin. Is féidir leis an Aire athrú a dhéanamh ag an bpointe sin agus níl sé inghlactha go bhfuil an Rialtas ag smaoineamh ar chomhlachtaí móra.
Is comhlachtaí móra don chuid is mó atá i gceist. Is comhlachtaí móra iad le buiséid an-mhór. Tá an t-uafás airgid acu. Tá sé inghlactha go bhfuil an Rialtas ag iarraidh céad teanga na tíre seo a chur ar leataobh chun an bealach a éascú do na comhlachtaí móra sin. Tá sé maslach amach is amach agus nílim sásta leis an méid sin. Beidh teagmháil á dhéanamh agam leis an Aire Sláinte chun dul i ngleic leis an bhfadhb seo. Níl sé inghlactha go bhfuil an meon seo ag an Aire Stáit, an Teachta Naughton. Tá go leor samplaí eile ar fud an domhain áit a ndéantar seo. Níl sé inghlactha.
First, this is not just the view of the Minister of State, Deputy Naughton, but also the consensus view following the Dáil debate in 2018, when the issue was considered at length.
Ag an bpointe sin, ní raibh Fianna Fáil ann. Tá meon an-dhifriúla ag mo pháirtí féin i leith na teanga.
Okay, but there was a debate of the entire House, and I do not think we should necessarily talk about what various parties said. There is a collective responsibility within the Government now that this is Government policy. The Senator can, by all means, raise the issue with the Minister for Health.
Wearing my hat as Minister of State with responsibility for agriculture, I should pull up the Senator on the suggestion these are all large companies. They are not. Many microbreweries and small distilleries are setting up and it is an onerous task for them to change the labelling. That is part of the consideration. It is easy to say they are all very large companies and that, therefore, making the changes is fine. I take on board the Senator's upset and sense that the Irish-language element is unfair and wrong, but I am just outlining the process that occurred regarding the decision-making and where it came from. I am sure the matter will be discussed further. These are draft regulations and the prescribed health warnings and information on the HSE website must be in Irish as well as in English, so that is another point. Moreover, warnings in Irish will have to be on notices in licensed premises and displayed on websites that sell alcoholic products also. This will ensure the information will be available in the Irish language at the place of purchase. Our labelling proposals are designed to inform all of us as consumers that alcohol is not a risk-free product. The information on the labels and elsewhere will let us know the health risks attached to alcohol consumption in order that we can make informed choices about that consumption.
I again thank the Senator for raising this important issue.
I thank-----
Níl siad ag freastal ar phobal labhartha na Gaeilge.
I apologise but we must move on.
Tax Code
Cuirim fáilte mhór roimh an Aire Stáit. Much attention has rightly been placed on the role of fossil fuel companies in the climate crisis, but we cannot afford to take our eye off the other big polluters, namely, the big tech companies. Big tech is exacerbating the climate crisis by driving demand for consumer goods through advertising and for electricity to run those advertisements. We often refer to Facebook and Google as tech companies but it is more accurate to describe them as the world’s two largest advertising companies. Alphabet generated almost 84% of its 2020 revenue from online advertisements, while Facebook generated more than 98.5% of its 2020 revenue in the same way. Their business models are entirely based on online surveillance advertising and targeting users, monitoring our online lives in order that they can persuade and manipulate us to buy more stuff. We will all have heard the phrase "data are the new gold".
Advertising aims to increase demand for goods and services. A 2022 report published by Purpose Disruptors found that the increase in sales driven by advertising had been responsible for 208 million tonnes of CO2 equivalent in 2022. As the co-founder of that organisation, Jonathan Wise, has stated:
The uncomfortable truth is that if you work in advertising, the better you do your job, the more damage you cause [to the planet]. This is because advertising drives consumption and consumption drives carbon emissions.
As we all know, given it has been the subject of a great deal of debate, data centres have huge electricity demands and associated emissions. We need to ask where that insatiable demand is coming from and what is happening in these data centres. One of the answers involves processing the power for immense volumes of online advertising. An insidious practice these data centres use is what is called real-time bidding, RTB. When a person lands on a web page, a complex, quick and energy-consuming auction occurs to determine what advertisement he or she will see. Real-time bidding uses data gathered on individuals, their likes and dislikes, interests, vulnerabilities and even their moods to sell their attention to the highest bidder, and the Irish Council for Civil Liberties helped uncover the scale of this practice. The machinery behind this system has an enormous appetite for energy. Approximately 178 trillion real-time bidding transactions happen each year in the US and Europe alone and are processed through data centres, many of which are based in this country. It is estimated that amounts to 200 TW-hours each year, which equates to more than the entire national energy consumption of a medium-sized country happening through these real-time bidding auctions just to prey on our vulnerabilities and try to sell us products. According to a report by Global Action Plan, the technology behind this kind of online advertising, known as ad tech, is incredibly wasteful. In any one RTB auction, only one bid ultimately leads to an advertisement but trillions of unsuccessful bids surge around global data centres burning energy and heating the planet for no reason at all. In fact, 99.999% of the computer power used in these RTB auctions does not result in an advertisement and is completely wasted.
I acknowledge the Minister of State is at the Department of Agriculture, Food and the Marine, so he will just have to read out a prepared script, but it is time the tech companies were made accountable for the emissions they are producing. It is resulting in a very significant cost on our grid infrastructure, putting our energy security at risk and playing a significant role in climate change. Will the Government explore a tax on online advertising? Other countries have imposed taxes on advertising revenue, including Britain, Austria, France, Italy and Spain.
I thank the Senator for raising this important matter relating to an online advertising tax, which I am taking on behalf of the Minister for Finance. I understand that the Senator is referring to a tax in the same vein as a digital tax, which has been the subject of discussions in the area of international taxation over recent years. It is the long-held view of the Government that to ensure there is a level playing field between the traditional bricks-and-mortar economy and the digital economy, it is important the tax system evolve to cater for the digitisation of the economy. As this is a global issue, it is important there be a global solution.
The European Commission proposed a digital services tax, and separately a digital advertising tax, some years ago, which sought to impose a 3% levy on the turnover of certain companies’ digital activities. At the time, Ireland's concerns regarding the proposals arose from the suggested fundamental shift to taxing revenues rather than profits. It was our view a digital advertising tax proposal would do nothing to mitigate this and would serve only to target specific companies, heighten international trade tensions and potentially harm economic growth.
For these and other reasons, member states ultimately could not agree to the measures and instead sought to focus on finding a global solution to taxation issues in this area at the OECD. The OECD-G20 Inclusive Framework on base erosion and profit shifting, BEPS, met in October 2021 to agree a two-pillar solution to address tax challenges arising from the digitisation of the economy. Pillar 1, which is most relevant to what we are discussing here, will see a reallocation of 25% of residual profits to the jurisdiction of the consumer. Its scope is confined to multinational groups, MNEs, with a turnover in excess of €20 billion annually.
Ireland recognises that taxation issues are created by digitisation where profits can be made by MNEs without a taxable presence in jurisdictions. Pillar 1 seeks to address this issue by reallocating a portion of taxing rights to those jurisdictions to account for this digitisation. Therefore, Ireland signed up to the agreement recognising that the current rules, first agreed a century ago, must evolve to reflect how modern business operates. Pillar 1 will be implemented via a multilateral convention, on which work is well advanced at the OECD. It is anticipated this will be finalised by mid-year, with a signing ceremony scheduled for July. Once signed, the multilateral convention will be brought before the Oireachtas and debated as part of the legislative process, including in this Chamber.
Once signed, the multilateral convention will be brought before the Oireachtas and debated as part of the legislative process, including in this Chamber.
Pillar 1 is comprised of amount A, which seeks to allocate a taxing right to market jurisdictions, and amount B, which seeks to simplify certain aspects of transfer pricing rules. Implementation of amount A will require all parties to remove all digital services taxes and other similar measures with respect to all companies, and commit to not introduce such measures in the future. Pillar 1 should address the same concerns that digital services taxes and digital advertising taxes are trying to address. It is important this ongoing process is allowed to continue without the added complexity that would be triggered through introduction of unilateral measures by individual jurisdictions, such as a digital advertising tax. There are, therefore, no current plans for the Government to introduce a digital advertising tax at this time, which may risk undermining Ireland’s position at the OECD and may ultimately need to be amended or withdrawn once that process concludes. lreland continues to participate actively at the OECD to ensure it is at the forefront of discussions on these important matters and ensure its tax system can adapt and evolve to meet the needs of the economy into the future.
I do not agree with the Minister of State's response that unilateral measures would risk Ireland's position at the OECD. We know that other countries have already introduced a tax on digital advertising, not the digital tax he is referring to. The Austrians charged a rate of 5% on gross receipts from advertising services rendered by providers in Austria if they are targeted at Austrian users on Austrian devices. The French scheme takes aim at targeted advertisements in particular. It is clearly workable and clearly not something that is tied up in the wider issues the Minister of State outlined.
According to the organisation Core, the advertising market is worth €1.23 billion in Ireland. Using back-of-the-envelope maths, if we were to introduce a 3% levy on that, it would bring in €60 million that could be used to help to tackle climate change in this country and go towards a just transition. I do not accept that we cannot move in a unilateral way. That is always the response whenever we raise issues in this House. We are looking around and we see that our European counterparts are showing the radical responses necessary to tackle climate change by moving without having to wait for an EU-wide proposal.
I again thank the Senator for raising those points and note the frustration with which she articulated them. I will bring them back to the Minister for Finance. I did not necessarily expect the Senator to be happy with the response but, notwithstanding that, a global approach to address the challenges raised by digitalisation under Pillar 1 of the OECD agreement is preferable to unilateral measures such as a digital advertising tax. Unilateral digital taxes only serve to increase international trade tensions, which would not benefit Ireland. They would undermine the trust required to achieve a lasting global solution at the OECD inclusive forum on BEPS, which is the best forum in which to achieve this. As I mentioned, this is a global problem requiring a global solution. The Government remains fully supportive of the OECD agreement and looks forward to both agreeing and implementing the rules in the near future.
Cuireadh an Seanad ar fionraí ar 11.14 a.m. agus cuireadh tús leis arís ar 11.34 a.m.
Sitting suspended at 11.14 a.m. and resumed at 11.34 a.m.