Joan Burton (Dublin West, Labour) | Oireachtas source

I move amendment No. 47:

In page 39, between lines 7 and 8, to insert the following: “Report on minimum effective rate of corporation tax.

22. The Minister shall within one month from the passing of this Act prepare and lay before Dáil Éireann a report on the merits of a minimum effective rate of corporation tax, along the lines of the minimum effective rate of income tax introduced in respect of the taxation of individuals.”.

This amendment offers a path to address some of the issues we discussed. In this context, it is strikingly obvious from the report of the Paradise Papers and the Panama Papers that significant numbers of individuals and companies do not just want low taxes. Rather, they want to pay no tax in whatever global situation or company they work in.

I have raised this issue on a number of occasions over a long period of time. In the context of the most recent revelations and the decision of the United Kingdom to leave the European Union, regardless of whether there is a long transition period, this is something we in Ireland have to address.

Notwithstanding the fact that we have a very clearly stated rate of corporation tax and other taxes, people who operate with the intention to avoid or evade taxation and use a globalised financial, taxation and legal system to do so can avoid paying any tax in Ireland. It is in that context that I put forward this amendment.

I heard a representative of the OECD, whom I have met on many occasions, speak on "Morning Ireland" earlier. When I was a member of the previous Government, I was probably the strongest advocate for Ireland joining the OECD process in regard to broad tax reform with a view to benefiting all countries, including Ireland. I did not want the country's eyes wiped by accountants, lawyers and others who play a globalised game, in terms of desperately needed tax revenues for this country.

Ultimately, such behaviour is probably one of the greatest threats to modern democracies because it is resulting in a skewed and unfair system. As revelations in various disclosures have shown - there will be more - some people are getting away with it because of the global structures in which they are involved.

Ireland has an extensive range of tax treaties with other jurisdictions. Jurisdictions which were part of the British empire are the most effective and efficient forms of tax avoidance locations anyone in the world has seen.

There are a number of states in the United States which specialise in this area as well.

We have a problem. We also have a problem, as the Minister is well aware, with our neighbours in the European Union who, understandably, at times have a concern and at times pick unfairly on Ireland because they believe that, due to our corporation tax regime, we are a major facilitator. We know the current discussions in regard to the Apple case. What I am suggesting to the Minister is that he produce a report on a minimum effective tax rate. His predecessor had certain objections to this, which I have to confess I never fully understood. A minimum tax rate can be set very low but it does a couple of things. From a tax point of view, it means that the corporation comes into a potentially meaningful relationship, a documentary relationship, with the tax authorities in this country, other than filing a simple return at the end of which is a big nought, because it does not have anything to pay, or at the end of which is an amount that is so low in regard to its taxable profit that it defies the understanding of ordinary citizens. I do not believe the Government has anything to fear from such a report. In fact, in the context of the current revelations, and perhaps the strategic communications unit could be consulted on this, there is much to be said for the Irish Government not disregarding Irish interests but addressing these issues and developing an awareness of what is coming down the tracks.

What is coming down the tracks is a way of doing this that a number of jurisdictions have already shown and debated. ? Obviously, I do not know if this is this going to take a short or a long time, although the Minister may have more information on that. He is attending ECOFIN and I am sure some of these issues will come up. As I said, this issue in regard to income tax was addressed by one of his predecessors quite a long time ago. That was done by agreement and the sky did not fall in, although many were fearful the sky would fall in. Instead, very wealthy people who are resident in this country have to contribute a minimum effective tax rate whereas the Revenue Commissioners' reports had previously shown that people earning in excess of €1 million annually were paying no tax at all because of the arrangements they had entered into.

The report is to be on the merits of a minimum effective tax rate. This would require whoever was drawing up the report on behalf of the Government to address the downsides of having a structure which is riddled with loopholes like a sieve and which, because of the secrecy surrounding taxation affairs, we always learn about some years later. That we are not doing this is absolutely undermining our democracy and the democracy of many other countries. I am sure there are people, particularly within the Revenue Commissioners, who are very knowledgeable about this and who could produce a measured and thoughtful report about what this is doing to the country, the implications for democracy, the implications for the fairness and equity of the tax system and fairness to different classes of taxpayer and the implications for the future strong, positive and robust development of the country. We are at risk, post-Brexit, not just of becoming an outlier but, in the eyes of some, of acquiring a kind of pariah status, which is deeply unfair to this country and, strategically, is something the Government should be very careful about. As I said, there was a lot of opposition in previous Governments, at a time when I do not think the Minister, Deputy Donohoe, was a member of Government, to the idea that we would, for example, pursue the OECD process. We pursued the OECD process and, if anything, it has been very helpful to the country in that the OECD was able to come out at various stages and say that Ireland is not a tax haven per se, which has been very important for our international reputation. It would also be very important to future investments in this country as very big global investors will seek to be in environments that are not labelled simply as tax-dodging entities.

I would be interested in what the Minister has to say on this as I think it is fundamental to securing the future of this country. The Minister referred to banks not having any scheme to mitigate the use of carrying losses forward. He talked about that in terms of giving a payback to the taxpayers for what they had done for the banks. However, the Minister must seek to defend in a serious way the reputation of the country, which is being shredded. The Taoiseach may be very friendly with the President of France, Mr. Macron, but that is not going to cut much ice when Italy and France join up effectively, as they are doing at the moment and have been doing for some time, to address these issues.

The other issue is that some of the companies involved are so large that it is relatively easy to identify, say, the ten or 15 which may be most involved, certainly from our point of view. The old excuse is that we cannot discuss this on grounds of secrecy but these entities are so large and so much part of people's day-to-day lives that they are not secret. I totally agree with the adherence to secrecy in terms of taxpayers' affairs but, when the entity has multiples of the entire output of Ireland and multiples of the reach of Ireland, while it is not a country and is a company, fresh thinking is required.

The process began two budgets ago when the Government began to bring in people like Seamus Coffey to prepare reports. All I can say is that, whether one agrees with those reports or not, their production has been extremely useful and helpful to the country and its reputation. I am interested to hear whether the Minister is going to pretend this is not the world we are living in now. We need to look at this issue and be able to talk about it. We need to defend the rights of Ireland to attract foreign direct investment and the jobs it brings. We need to have a fair tax system, but one that results in corporations paying minimum taxes. There is no point in saying that, in practice, these very big companies actually do pay something; we need to have a structure that we can point to, and we need to pick a figure, for example, 6.5% or 7.5%, which is a very modest figure. We need to do that so we are able to turn around in the future and defend our location as a very attractive location for foreign direct investment. We need also to be able to reassure those companies that the environment in which they are operating is genuinely lawful and not damaging to the rest of the world.

These are very big issues. The proposal is to look at minimum effective tax rates. One can pick different kinds of minimum effective tax rates and it would be for whoever the Minister might commission to work on this. Ten years ago we could not get any information about how much the highest and lowest individual taxpayers paid in tax.

Gradually we got information about that and that enabled us to change the system.

At the moment Ireland is being called out and named, unfairly in some respects, as being among the worst culprits mentioned in the recent revelations. We need to put our collective information and intelligence on this matter together because otherwise we risk becoming a pariah country, something we do not deserve. We should not receive such treatment but the Minister is going to have to take some decisions to address this.