Dr. Micheál Collins:

One must consider the potential for abuse on a large and small scale. The rules of the Revenue Commissioners for benefit-in-kind should detect small-scale abuses. Perhaps the Deputy should ask Revenue how rigorously it reviews benefit-in-kind claims. However, clearly there are bigger issues in the corporate area. The Deputy referred to the ability of corporates to change the valuation of assets, which can dramatically alter transaction values or trigger paper losses or profits, for example. There are significant questions about accountancy practices in that regard which are very detached from the real world and real world activities. The Irish tax take and consequently the budget are very exposed to such practices because of our dependence on a very small number of companies which largely operate in that way. Much of the unexpected windfall corporate tax income collected here in the past couple of years probably resulted from the OECD base erosion and profit shifting process and the fact that it is no longer acceptable for a company to be based on various Caribbean islands. Ireland has been one of the beneficiaries of that policy and collected significant tax revenue as a result. However, it is quite precarious, rather than sustainable income for the tax system.

On the Deputy's point about what is included in the base, the easiest answer is that we need to start with a list of what is included in it and the question of what is a tax expenditure. It would be useful to have a full list. The report of the Commission on Taxation provides a good starting point in that regard. One could also revisit the list of the Department of Finance.

The challenge then is to continue to revisit that because we can begin to think whether it is appropriate or not to have various assumed automatic tax reducing measures that we have as baseline measures. We can revisit those to see if they are appropriate or not. Having a base and a recurring list would really help this committee. To be honest, I would probably start big with some of the big ones. I would start with the big themes and work from there. There is a real contribution to be made by having a regular recurring process of looking at and examining this whole area of tax expenditure.