I move amendment No. 122:
In page 75, subsection (1), between lines 42 and 43, to insert the following:
"(a) by the extension of the 10 per cent. corporation profits tax rate to technical and consultant service contracts executed in all export markets outside the European Community."
I gave much thought to this amendment, first about tabling it and secondly about its target. I gave it much thought against the background of the Culliton report which, among other recommendations, clearly states that it does not want to see an extension of the general application of the 10 per cent rate of tax.
I know that since the Minister has already extended that concept to the advertising income of newspapers, the ministerial pot will not call this suggestion black.
It arises largely out of my experience trying to pick up expressions of interest in EC schemes by Irish companies. I am convinced through the work done heretofore in the European Parliament that Irish firms in general and Irish consulting firms, in particular, are slow on the uptake, for many reasons, in respect of a variety of EC schemes.
In the amendment I am suggesting that the 10 per cent corporation profits tax rate be extended to technical and consultant service contracts executed in all export markets outside the EC.
Were we to apply it inside the EC it would be trade distorting, anti-competitive under the Treaty of Rome and would not wash. Outside the EC, however, I am thinking of Central and Eastern Europe, the Commonwealth of Independent States and the African, Caribbean and Pacific countries for which there is the PHARE programme — aid and technical assistance to Central and Eastern Europe — the TACIS — technical assistance to the Commonwealth of Independent States programme for the former Soviet Union and the Lomé Convention for the ACP countries.
Under those programmes there is a very significant amount of contractual work for technical and consult service contracts. My confirmed belief from looking at the reports on those programmes is that in Ireland, we are doing badly on them. The general size of our consultancy companies, like most of our companies, is very small by European standards. We are not big players in that context. There is a very high cost of entry to that type of market. We live on an island, there are expensive air fares, hotels and so on and this tends to be offputting. It is easier to look for consultancy contracts near home or in the UK rather than heading off into the great unknown.
The third thing I have discovered, much to my disappointment — I made something of an issue of this in the European Parliament — is that many of the contractors use people as tender fodder. They will probably have decided who they want in advance but the rules oblige them, for contracts above a certain level, to invite submissions. When companies are bitter like that after putting in all the man hours and, in some cases, man years to produce proposals, paying travel costs and so on they are twice shy.
Section 18, which we dealt with yesterday, seeks to generate more enterprise here. This is rich in employment terms. We are not talking about big capital assets. Technical and consulting services are based on people power and brain power rather than on capital assets. It is focused on non-EC activity precisely because I would not wish it to be caught offending competition rules. It is aimed to encourage or to signal to Irish technical consulting companies that there is a vast market to be tapped, not least in EC schemes for Central and Eastern Europe, the former Soviet Union and African, Caribbean and Pacific countries. It has a great deal of merit and is worth considering.
It was with some trepidation I thought of tabling the amendment because I do not incline easily to the view of tax base write-off. The general prescription of Culliton was not to extend this tax but its logic is very much in line with the logic that the Minister employed in section 18 which was discussed and approved yesterday. I urge the Minister to consider my amendment. Perhaps it needs the expertise of a parliamentary draftsman to tighten it up but the essential idea is a sound one. It is for people with power which we are very rich in and it is worth looking at.
