Joan Burton (Dublin West, Labour) | Oireachtas source

In regard to the point made by Deputy Michael McGrath about how one deals with minimum effective tax rates, I do not think one has to worry in the sense that one can pick a figure at which that begins to operate. The discussion earlier was in relation to the banks and their very significant profits running into the hundreds of millions, and probably into billions in the next year or two. It does not matter what the tax rules are. There is something absurd in a country where there is a desperate need to fund both investment and services to have extraordinarily profitable institutions bailed out by the taxpayer who are not making any current contribution. The remedy on that is very simple. It is brought in at a certain level of profit so that there is no problem for a company in a run-of-the mill situation where it has had a lot of capital investment and it may have had losses in the context of building a start-up. It is set at a certain level and once a company has attained a certain level of profitability it must contribute. That is what we have done in regard to high net worth individuals and therefore it just affects that category of people. It is a targeted approach. SMEs are highly unlikely ever to be affected by this.

In terms of the contacts with other European countries, I think the baseline studies that have been done to establish what real effective tax levels exist in different countries are very important because every country has different rules and there is no compatibility in those rules. However, in terms of the BEPS process, it is a long-range one, which I support. I have publicly and privately supported it. I am happy to say the Government of which I was a member eventually supported it. That made a lot of sense for Ireland. I am basically challenging the Minister to continue that work in a way that will develop and protect Ireland's reputation rather than make us the target for future punitive action.

From what the Minister said in terms of ECOFIN, it may well be that most European countries have now decided to take a bit of a step back from all of this and to talk the talk but not particularly to take action. In terms of the European Union itself, unless there is a way in which the fairness and equity of taxation is visible to citizens in terms of how they are treated for taxation purposes by government in all sorts of different ways and compare that with companies, in particular a clutch of key, globalised companies who effectively are outside the jurisdiction of most countries. What has been shown in the Paradise and Panama papers is the use of globalised mechanisms. All we can do is to address those mechanisms as they arise. We had some debates on the issue here. There was an example of a company with significant profits paying €250 in tax. It is very reasonable to ask how that happens. If somebody earns €30,000 a year he or she will still make some contribution even though in the scheme of things it is not a lot of money.

The Minister and his fellow ECOFIN Ministers must consider the principles of equity and what in the long run is the best for sustaining countries. I am interested in the long run in Ireland being attractive to foreign direct investment. I am interested in Ireland being attractive for Irish SMEs and in Ireland creating employment. I have always stood by that and the Labour Party has always stood by that. The Minister is running away from the issue and seeking to wrap it up in a message that all is now fine; there is nothing to see here, move on. That is not true. We know, for instance, from the report of the Revenue Commissioners themselves on the black box and the R&D tax credit that we are now paying refunds to companies that are paying no corporation tax. On the scale of things that is a small problem but it is a problem that requires to be addressed. I put it to the Minister that the essence of taxation is that it is something that is in a constant state of flux and development and I am seeking that Ireland protects the integrity of its tax system as regards companies and corporations by having a structure on minimum effective tax rates. That is all. It is going to protect Ireland not cause any damage and it is going to improve fairness relative to ordinary taxpayers.