Mr. Brian Cotter:

I will address the questions of Deputy Nash first. I am pleased in one way that he has raised this issue. He will be aware of the importance of separating the issue of marginal tax rate from the special assignee relief programme. The special assignee relief programme is designed to ensure our members in particular do not pay additional costs when they transfer a member of staff for a short period, in other words, an assignment, to Ireland. The costs at present can be in the region of 15% to 20% extra because of what is termed the tax equalisation policies of US companies. This means if a US company moves staff, there is no difference to the tax in the wage packet of the staff member and the worker will not suffer whether the tax rate of the country he is going to is lower or higher, because the company equalises the costs. Sometimes this takes place by way of the company giving extra incentives like housing support or support for the family in moving to a different jurisdiction. There are different packages. That is the reason for it and we want to be competitive in that sense. In particular, we want the people who are in charge of finance in the United States to be aware of it. When a company decides to move people to Dublin for a period of 18 months, we do not want the finance person to say it will cost extra money and they do not have it in the budget. That is where we are going with that and we want that to be competitive. It is not competitive at the moment mainly from an administrative perspective. Some tweaks on how it is being implemented would be welcome. We are satisfied there is a good regime and that the mechanisms are in place, but we believe it can be improved.

There has been some discussion on marginal income tax rates. We compete with countries such as Singapore, Switzerland and the United States. The marginal tax rate in Singapore is 20%, in Switzerland it is 11.5% and in the United States it is 35%. We do not have to look too far afield to see lower and falling marginal tax rates. It is happening to our neighbours next door. Marginal tax rates are a tax on talent. Talented people, whether technical or managerial, tend to get paid more. They are highly mobile. We need to be sensitive to that. As the committee members are well aware, workers in Ireland fall into the marginal tax rate at a much lower level of income than in other countries. All this plays a part. We are keen to ensure we retain and attract new investment, but part of that involves attracting skills and retaining skills. We do not want the global leaders who are here, many of whom are Irish, to leave because suddenly it is more attractive for them to be in another operation in their company, and that might be the case. We have to be conscious of that when we are looking at our tax policy. That is where we start from.

A question was asked about tweaking it one way or the other. One would have to carry out an econometric study to get the right result. At the moment we reckon the feeling is that we are on the cusp. There is an understanding that we can support that cusp at the moment because of where the country is, but we need a plan to get our marginal tax rates more in line and more attractive in order that we can retain the talent. The committee should have no doubt that this is of concern and we do not want to see Ireland losing talent, leadership talent in particular, to other countries.

On US tax reform I was very pleased to hear the President of the United States, in the presence of the Taoiseach in the White House, confirm before the world media the importance he and the US administration attach to investment in Ireland. In doing so he recognised the fact contained in the paper we presented today that Ireland is an export platform to the European Union for US multinationals. From that perspective they may not like the fact that we are competitive but we play fair. Ireland prides itself on being compliant and we will play within the rules. We have never been found not to be compliant with major tax treaties or law. That is part of our reputation but we will compete and we should be proud to compete because that is one of the tools that we have to attract investment and build our industrial base here.

In response to the question on competitiveness, we have talked about the combination of track record and skills. When one steps back and looks at what is really successful in Ireland what stands out and is repeated again and again, is what is referred to casually as the "can-do" attitude of Ireland and the people who work in Irish facilities. They get things done. They do not let artificial barriers get in the way. That flexibility and agility have been huge advantages. It is hard to measure that. We have asked economists if they could do a study on it but they cannot figure out a way to measure it. We want to maintain that reputation of getting things done. That comes down to regulation and making sure that we have a regulatory system that meets our minimum requirements but does not get overburdened with business and employment law. That is really successful.

We have to watch our cost base. I draw the committee's attention to the National Competitiveness Council. We still have one of the highest cost levels in Europe and that is affecting employment. The lower the cost base the more opportunities there are, particularly in the manufacturing sector, to gain greater elements of the value chain. They do interact. As our economy recovers we need to seek ways in which we can restrain the cost base. The State is a big player in that area. It still owns many of the utilities and drives them through regulation. Tax in the form of local charges, etc., is another factor. We must be very cognisant of what is weighing on the Irish economy. That is all very well articulated in the National Competitiveness Council's report which makes hard reading for everybody but is a very accurate reflection of what is being and what needs to be done.

A change in corporation tax would be catastrophic. Our brand value is certainty. Our commitment to 12.5% through thick and thin is the brand we advertise. If the committee reads the Revenue accounts for the State and compares the headline sources of income it will see that Ireland gains a higher percentage of revenue from its corporate base than other countries. That is because we generate a lot of corporate activity here with our low corporate tax rate so in terms of the top line numbers for the US companies, approximately €3 billion in total taxes, some of the largest taxpayers in the country are large multinational businesses trading in Ireland with real substance. Our tax policy has been successful in generating income and jobs and we want to sustain that. Companies value limited risk. If we are committed to stability, neither decreasing nor increasing it, that will be warmly welcomed. In all discussions at EU level and with the OECD regarding taxation reform we also encourage them to keep a keen eye on Ireland's interests. We welcome the fact that the Irish Government is constructive. We will play within the rules but we will be competitive and as long as we are hard-nosed about that we will be successful.