Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

I thank Dr. Collins for attending. I welcome the fact that he welcomes our focus on this. It is an area about which everyone needs to think more. I wish there was more media attention on it.

There is major debate in respect of direct expenditures in the budget. There is almost no debate about the massive amount of money that could be used for other things but is accounted for by tax expenditures, many of which could arguably be described in layman's terms as tax loopholes. It is controversial, but some of them certainly are. Whatever we may think about some of these expenditures they should at the very least be scrutinised and they are not. I will go as far as to say it is a hidden economy on which nobody is focusing. Due to the fact that it is shrouded in technical language, people do not pay much attention to it or understand it. While I am here, I call on the media to scrutinise this area and pay the same attention to it that I hope the committee will. There is a lot of really important stuff here. I welcome Dr. Collins' initial comments.

I have a few questions about establishing the scale and extent of tax expenditures. Dr. Collins stated that some €21 billion could arguably be described as discretionary. That is a major amount and needs to be scrutinised. I hope this committee will do so. I wonder if the figure is greater than that. I am not an accountant like Dr. Collins. He can provide a more expert opinion on this. In the corporate tax area, I showed a table in the last committee meeting that was provided by Mr. Seamus Coffey, based on Revenue figures in his report on corporate taxation. In 2015, the last year for which figures were available when he produced his report, pre-tax gross profits were €144 billion. By the time allowances and deductions were allowed for the taxable profit came down to about €70 billion. The actual tax collected was about €7 billion. On a straight calculation that means the figure of 12.5% is a total fantasy. There is no 12.5% corporate tax rate. Similarly, on a straight-line basis, there were about €77 billion worth of corporate tax reliefs, credits, deductions and allowances, which is a lot more than €21 billion.

I would like Dr. Collins to outline his understanding of that. The explanation we got on the previous occasion was that some of those are just part of the tax base. Dr. Collins referred to that in his introduction. They are part of the administration of the tax system and are not really discretionary tax expenditures. I have to question how that distinction is made.

Dr. Collins referred to intra-group transactions as an example of things that are administrative and not really discretionary. In comparing the Revenue table for 2016 with that for 2015, I see that tax relief for intra-group transactions jumped from €2.9 billion to €9 billion. That is not administrative. Something else is going on when tax relief for intra-group transactions goes from €2.9 billion to €9 billion in one year. My guess is it has something to do with the big IT companies moving royalties on intellectual property around. It is not just administrative. It is actually a huge loophole, at least potentially, and it needs to be scrutinised. I would like Dr. Collins to comment on that. Does he think that corporate area is one we need to heavily scrutinise? From my observations and certain allegations that have been made to me by people in the film industry for example, which we talked about last week, it seems costs are being massively inflated in certain circumstances in order to benefit from tax reliefs. To what extent are we checking that those are legitimate? Expenditures and allowances need to be heavily scrutinised. However the practices have been followed for years. As such it is felt that we do not need to look at them, only at the ones introduced in the past few budgets.