Sean Barrett (Independent) | Oireachtas source

We turn the tax breaks on and turn them off again. We have had to reduce the number of civil servants and before that the Wright report pointed out that 7% of the staff in the Department of Finance had qualifications in economics. We cannot rely on it to switch things off. As we are not that subtle in the implementation of Keynesian economics, we have 80,000 empty houses throughout the country and motorways built to cater for 55,000 vehicles a day with only 7,000 or 8,000 using them. That is the background. We do not evaluate properly - the Department of Finance is unable to do it, resulting in problems such as those mentioned in page 12 of the Chartered Accountants Ireland submission to extend the foreign earnings deduction to the United States, Switzerland and Japan. It was first brought in in the case of BRIC countries, which are very far away and there is a requirement to learn a new language. Then it was extended to eight African countries. Now we are not able to do business without a tax break in three of the most prosperous countries in the world. That is the fiscal termite effect - these things start small and get bigger. I would love to think they started small and were eliminated, but that is an illustration of it.

Section 5 of the Finance Act 2013 extends the key employee provision of the research and development tax credit so that the amount of time employees must spend on research and development in order to qualify is being reduced from 75% to 50%, which cut the amount of activity we are supposed to be promoting. I am concerned about provisions in the Finance Bill not being analysed. Had the Minister, Deputy Noonan, not been the chief Finance Minister in Europe at the time, he would have attended to some of these. The overall package has left us with an empty Exchequer and mass unemployment. These requests must go through rigorous analysis and be justified with a cost-benefit analysis. For example, whom does the film tax break benefit? We have too many of them at a time when we are reducing carer's allowance and pensions, and increasing school class sizes. We need to have a proper context in which the representations from the Irish private sector are assessed as to whether they are just enriching individuals or whether society as a whole is better off. Those are the examples that occur to me.

When we asked that the Irish Fiscal Advisory Council carry out an assessment of the tax credit, the Minister said that as such an assessment would significantly expand the mandate of the council, would require much larger resources in terms of staff and budgetary allocation, and would be likely to impede the fulfilment of its core functions, he was reluctant to move in that direction. The problem is that these matters are not analysed. Interest groups will promote them, but with a bankrupt Exchequer, I am not sure we can recommend much by way of concessions.