Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

That is all very interesting. The Deputy has made a series of assertions which are incorrect.

He is saying that, despite the fact we have concentrated on a low corporation tax rate, it is proving to be ineffective because other countries in Europe with higher corporation tax rates are surviving the recession and growing rapidly, while we are still floundering, but that is not true. In the recent Commission assessments of growth in Europe, Ireland is ranked highest in western Europe. Estonia is slightly ahead of us in the growth projections for 2013, 2014 and 2015. Many of the traditional economies in Europe that the Deputy is describing have minus rates at this stage.

What I have said is that there is no agreed international measure of effective tax rates, but that does not mean individual countries cannot measure their effective tax rates. The most extensive work done in Ireland was the work to which I referred, under the supervision of the World Bank, which indicated that the effective rate of tax in Ireland was 11.9%. The European Commission, in a recent report on the effective rate of tax in Ireland, came up with a figure of 14.4%. The reason the effective rate of tax in the Commission's calculations is deemed to be 14.4% is, as I said, we do not use brass plate operations in Ireland. The tax rate applies to the productive sector. Brass plate operations, because their income is passive, are taxed at a rate of 25%. Taking the rate applied to passive income of 25% and combining it with the 12.5% rate, the familiar rate, the Commission came up with a figure of 14.4%.

In the Deputy's calculations he came up with a figure of 6.8% which he frequently gives in a series of Dáil questions. On how he arrived at this figure, in 2010 corporation tax receipts were €3.9 billion, while the total income figure for all companies was €61 billion. I am told that dividing one by the other gives a rate of 6.8%. That is the way he made the calculation, but the total income figure represents the profits of companies before adjustments are made for a number of items, including losses brought forward, group relief on losses, excess capital allowances and other charges. To get the more appropriate figure, the Deputy should have divided the figures of €3.8 billion and €41.2 billion. This is contained in the same Revenue statistical report for 2010, although I am not criticising the Deputy. We all lack resources in opposition, but he made the wrong calculation. If he had made the right one, his figure would have come out at between 10% and 11%, which is not 1 million miles away from the effective rate of 11.9% in the report to which I referred, but it is well short of the Commission's assessment of a rate of 14.4%. Ours is not a brass plate operation and this is not a tax haven. The Deputy criticised Deputy Michael McGrath for being cautious. He might recall from the old war movies a poster in the United Kingdom which read: "Loose Talk Costs Lives". Loose talk does not cost lives in Ireland any more, thank God, but it could cost jobs and we do not want to move into that space.

This is and has always been a competitive business. When I was in the then Department of Industry and Commerce, I remember coming back from Boston, having been across America with the Industrial Development Authority, and being told that a project out of Dallas, Texas, which was supposed to locate in Dublin had been taken by the Scottish Development Authority. I was asked to go to see if we could recover it. When I spoke to the chief executive of the company, a derivative of Texas Instruments, one of the older initial computer companies, he put cuttings from the The Wall Street Journalon the table in front of me derived from a report of a Dublin based journalist in one of the evening newspapers which was critical of Ireland's economy and its tax regime. It was said that was the tipping factor and the reason the company had decided to locate in Scotland. We need to be truthful, transparent, honest and direct, but we also need to be cautious to ensure we do not supply ammunition to our competitors.

Let me suggest a way forward because a real issue is being addressed. I appreciate Deputies Michael McGrath and Pearse Doherty's take on this and Deputy Richard Boyd Barrett's work on this issue also. The work that has been referenced is being undertaken by the OECD as part of its base erosion and profit shifting project. It is looking at the low global rates of tax paid by the multinational corporations as a result of transnational structures. The project is focused on coming up by June 2013 with a comprehensive action plan on how to deal with such practices. We are co-operating fully in that work and if it comes up with a blueprint as a comprehensive action plan by June, that will give us a base for our discussion. Rather than commissioning separate work, we should continue to co-operate with the OECD, as we have nothing to fear. While our system is solid, it would be good to have research work to underpin it. We might then come back to this committee and examine what is contained in that report and determine the way forward. There is no point in duplicating work and it seems that it will be credible.

International companies should pay their fair share of tax. International companies in Ireland pay at the full rate of tax, as required under Irish law, on all profits accrued in Ireland. The difficulty arises in respect of certain inputs in Ireland and the cost base elsewhere. One of the biggest cost bases in modern industry is access to intellectual property, in other words, the right to use the patents underpinning the original invention. Companies, in their international tax planning, when they have bases in many countries, locate their intellectual property in a company in a jurisdiction where taxes are low. When they draw down on that resource in Ireland, it is listed as a cost which has the effect of reducing the profits in Ireland. That is a simplistic way of putting it. There are big variations and tax planners who are earning fortunes, but that is the basic principle and what is being criticised. However, its remediation is not in our hands. My concern is that we will become a reputational victim of international tax planning on issues over which we do not have control.

I welcome the OECD report, on which we co-operated fully. The OECD has stated it will have an action plan in 2013. Let us see what it will come up with, which we can then discuss. We will watch in the meantime, but this is fundamental for Ireland and we need to be prudent, as well as being very alert to what is happening in the marketplace.