Marie Sherlock (Labour) | Oireachtas source

Last week, we saw the culmination of 80 years of work in the OECD with the reaching of an historic agreement for fair tax competition across the developed and developing world. However, the Government decided to stand apart from 131 other countries by not supporting the agreement in full. There are serious questions for the Government, to which we need answers in this House. We need to know what is its strategy. Hedging our bets and waiting to see what will happen in the US Congress is a dereliction of responsibility and a failure of leadership.

Unfortunately, Ireland now appears cowardly in the eyes of many in the world. We cannot continue to bury our heads in the sand because, sooner or later, we will be called out for our approach to the base erosion and profit shifting, BEPS, initiative. For years we were extolling the virtues of BEPS when the European Commission was pushing for a common corporate tax base, CCCTB, and digital tax. Our national accounts benefited dramatically from the BEPS reforms back in 2015, but now that it does not suit us, we find ourselves in the company of Hungary and other countries. I accept that this agreement is important in terms of its impact on jobs and tax revenues. For years, I represented workers working in multinational companies here.

Two specific issues in this tax agreement jumped out at me. The first is that it makes no sense for Ireland to sign up to pillar 1 of the agreement and not sign up to pillar 2 because the two pillars are related. They both have an impact on the effective rate of tax multinational companies would pay here. A second key issue, which I do not understand, is our reluctance to engage on the headline rate. No multinational looks at the headline rate of corporation tax. They look at the effective rate of tax and we have an opportunity to lead on those discussions.

There is a concept of Ireland as a small country. Geographically and in employment terms, we are small. The tax agreement defines small countries as those with a GDP of €40 billion or less. Ireland’s GDP last year was more than double that. Let us not kid ourselves by making an argument to other countries that we are a small peripheral country. I ask that the Minister come to the House and explain this strategy.