Mr. Gary Tobin:

Again, that is a really interesting question. The OECD has done a lot of work on the issues of tax and growth. It carried out some major research on this subject back in 2008 and then engaged in further research in 2010. Without going into masses of detail, essentially, what it found was that, broadly, a 1% increase in the corporation tax rate internationally tended to reduce foreign direct investment in the country concerned by approximately 3.7%. For example, if there was an increase of 2.5% in the corporation tax rate, it would reduce foreign direct investment in the country concerned by approximately 10%. This is an OECD study which is not Ireland-specific and some would argue that were one to apply such methodology to Ireland, the figure would actually be higher. In other words, were there to be a 2.5% increase in the Irish corporation tax rate, the fall-off in foreign direct investment would actually be higher than 10%. There appears to be a strong and statistically significant link between the corporation tax rate and the attractiveness for foreign direct investment in the country in question. Again, I have to hand a chart that I photocopied and which I can distribute to members, if they wish. It shows effective corporation tax rates across the European Union, as measured by the European Commission's methodology. It tends to show that countries in the core European Union tend to have higher corporation tax rates than those on the periphery. When one observes this on a colour graph, it is very obvious and from an economic perspective, that the reasoning behind this is quite clear, that multinational companies tend to locate in countries that have big markets because they wish to be near these markets. Therefore, to get them to locate in more peripheral locations, other factors must come into play. Even if one considers Scandinavian countries which we traditionally perceive to be high tax entities, their effective corporation tax rates actually are not very high. Consequently, there is a strong, recognised and acknowledged link between foreign direct investment and corporation tax rates.