Mr. Sebastian Barnes:

I realise this is a sensitive issue. The discussion of corporate taxation concerns not simply the rate but also the entire set of arrangements around corporation tax. As it obviously is important in Ireland, it has come into our discussions, but obviously it is not the main topic we discuss. However, as the work of the council develops and our analysis goes into greater detail, I am sure we will get into the subject more, as we will with many other subjects. As Professor Barrett noted, for us, all of the issues are on the table. It is not as though we are focusing on particular subjects for ideological reasons. One reason that is worth noting is the corporate tax arrangements are not entirely in Ireland's hands because they partly rely on agreements with other countries, as well as on tax competition and what goes on in other places. In a long-term sense, it actually is a significant fiscal risk that even if Ireland keeps its policies the same, other things might change in the world that would make it less favourable to Ireland.

One point that is also extremely striking and at which we look a little in the report concerns the GNP-GDP distinction. As we spell out in the report, some think it is GDP, while others think it is GNP, but, of course, the extent to which they are different is largely associated with multinational profits. I note there is some tax value in this, but it is probably just not as high as in the rest of the economy. In a way, this is true of a lot of other countries also because, typically, the tax rate on corporations is much lower than it is on individuals, for example. The issue in Ireland is that the size of profits in the economy relative to GNP which probably is the most appropriate measure in this sense is very big. Consequently, one of the things we wanted to do by showing this hybrid measure, between GDP and GNP, was to show those foreign multinational profits were not worth anything to the economy. It is simply the case that they are not taxed in the same way as others. Moreover, it would be surprising if they were taxed in that way because nowhere are corporate profits taxed as highly as individuals.