Mr. Michael Tutty:

We have had a significant increase in corporation tax in the past two years. We have advocated this increase should not be used for ongoing expenditure because of the danger the tax revenue might not last. We would have been very happy to see the extra revenue being used for capital investment, which might not be ongoing, but instead it was used for current expenditure and tax reductions, which are ongoing. To some extent that horse has bolted. We got the tax increase but we have already used it, so we no longer have it. Unless we reverse the current expenditure or tax reductions we no longer have it available for capital investment.

I am not sure how we would curb this side of the economy. We will not tell the multinationals to go away and not show their profits in Ireland, which we are taxing, but show them somewhere else so we will not tax them and we will not have the volatility. They are there and we are benefitting from them. Over the past 30 years that I have been in the public sector, we have been talking about the need to build up the rest of the economy so we are less dependent on foreign investment and more dependent on the domestic economy and domestic Irish companies, but it has not worked. Until we find a way of making it work we must keep the foreign investment here. Unfortunately it has been distorting the economy even more over recent years than it had been up to now. This is why we have to get GNI* to see what is really happening in the economy.

I certainly agree with the Deputy that the productivity figures in Ireland are also totally distorted by the foreign companies. We are shown to have such huge productivity because of the way the multinationals operate. It is another area for which we need to adjust in order to see what is really happening in the Irish economy.