Dáil Éireann Debate, Tuesday - 13 December 2005
53 Ms Burton asked the Minister for Finance if his Department have received representations from the US authorities regarding the tax status of US companies operating in this jurisdiction; his views on the descriptions of this country in sections of the US media as a tax haven; his response to these descriptions; and if he will make a statement on the matter. [39250/05]
View answerI have received no such representations. Furthermore, Ireland cannot be regarded as a tax haven. We have a comprehensive taxation system covering income, capital and indirect taxes. In addition, Ireland has 44 tax treaties in place, a system of full exchange of information and proper regulation of activities to the highest standards.
Finally, I again emphasise that companies locate here for a variety of reasons and, in this regard, Ireland offers many advantages to US investors such as access to the European Union, a well-educated workforce, political stability and an enterprise-friendly administration.
Does the Minister share the IDA's view that over-aggressive use of Ireland with regard to tax planning by multinationals could adversely affect our capacity to attract inward foreign investment, particularly jobs related to the knowledge economy? Does he share the views of the president of the American Chamber of Commerce in Ireland that the description of Ireland as a tax haven is a misrepresentation and potentially damaging to Ireland's reputation as a preferred location for investment? The Minister spoke about tax returns a moment ago. Is he aware that if one strips out the US multinationals and transfer pricing on intellectual property, corporation tax undershot, rather than overshot, the estimates for performance last year? We have yet to receive an explanation for this. This is a very serious issue with regard to the positioning of Ireland as a knowledge economy. Does the Minister agree that US multinationals are locating the purchase of intellectual property rights in this economy, but we are not creating jobs commensurate with those rights? In fact, many of the 91,000 jobs about which the Minister spoke are low paid, minimum wage jobs. I do not want to go back to the dreadful Irish Ferries dispute and the outsourcing and dumping of well paid jobs from this economy, which is the other side of the picture. More than 100,000 people marched in the streets because of their fears for the future.
Many of the jobs to which the Deputy refers are not minimum wage jobs but are excellent, well paid jobs. They are being sought by many other countries throughout the world but we have successfully brought them here. Many of them are from expanding Irish companies that are making a bigger impact than ever before in many competitive markets.
I agreed with the points made by the chairman of the American Chamber of Commerce at the function in question which I attended and addressed. We do not reduce other nations' wealth. Our double taxation treaties, agreed with other countries, use well established arm's length principles. The corporation tax regime produces jobs and revenue that supports public services. The revenue has increased by 250%, from €2 billion to €5.5 billion. We have 44 tax treaties in place, a system of full information exchange and a proper regulation of activities to the highest standards. Ireland maintains a low general corporation tax rate by ensuring a wide tax base and careful prudent management of public finances. The 12.5% corporation tax rate is a general rate and is not focused on any particular segment of Irish industry. Our system is deliberately transparent so that all can see the attractions and benefits to the State. Other countries often have high nominal rates of corporation tax, but mask the true lower rate in deductions and deals with individual firms. We do not go that way.
Ireland is bound by the same rules on State aid, code of conduct and rulings of the European Court of Justice as other member states of the EU. We are fully compliant with both the code and the OECD process. We have acted in the past to amend regimes to close down abuses if they arise and we will do so in the future. The tax treatment of cross-border flows is regulated in accordance with double tax treaties agreed with other countries, using well established principles. They are negotiated according to OECD guidelines set down for this purpose. In general teams, Ireland has a comprehensive taxation system covering income, capital and indirect taxes. In recent years, we have concentrated on lowering the burden on enterprise and employment to encourage economic activity.
One of the Minister's predecessors, Deputy Quinn, brought in the 12.5% rate, which the Labour Party believes has brought a great amount of economic benefit to this country.
IDA Ireland stated that overly aggressive use of Ireland's tax benefit by companies, in an international context, results in little substance or value added activity taking place in Ireland. Marginal benefit to Ireland is not something that is advocated by IDA Ireland. What does the Minister feel about that? I am concerned that our economic strategy is not producing the high value jobs that are essential. Instead, we are concentrating excessively on international property rights being located here without the parallel jobs that the economy should be creating. Today's report suggested that Ireland will go from fourth to 21st place in the creation of high level, knowledge economy, information technology jobs. That is a warning to the Government on its economic strategy.
The idea that we do not have an economic strategy is nonsense. This does not happen by accident. It occurs because we make the right choices. It is true that the Deputy's former leader made an application for a 12.5% corporation tax rate. The work done by Deputy Harney and the former Deputy, Mr. McCreevy, on the application when this Government came into office, as well as the subsequent budgets which were opposed by the Labour Party, enabled us to bring the rate down to 12.5% in three or four years. Sending a letter to the European Union notifying it of the Government's attention to lower the rate to 12.5% does not make the Labour Party a low tax party.
We have a very clear economic strategy. The report entitled Ahead of the Curve was adopted by Professor Eoin O'Driscoll who chaired the group on developing Irish enterprise and on ensuring that the indigenous sector makes its contribution and identifies winners for the future.
We have gone from fourth to 21st.
Interrupting me does not change the facts. The Deputy asked a question and she should allow me the courtesy of giving an answer.
We are bringing forward a strategy under the chairmanship of Mr. Michael Buckley, who is ensuring all the recommendations from Professor O'Driscoll's excellent report are implemented. We are also making serious strategic decisions on the investment in third level education which I announced in this budget and which will be a central part of the next national development plan. We seek to bring about much more investment in broadband and other issues which are critical to the knowledge economy. We want to maintain an overall macroeconomic stance that ensures we remain competitive. We face challenges on competitiveness, as does every open economy. We need to deal with those to maintain the record job creation we have achieved under this Administration. We will implement the strategy successfully for a third term.
Will the Minster bring his running mate with him?
I would like to have one.
