Mr. Sebastian Barnes:

Yes. We do not know the strength of the different forces between the tax rate and the rest because we have only ever observed them together. Being an English-speaking country, the kind of economy Ireland has, the skills of its workforce and being a member of the European Union are all major advantages. As the Deputy said, the tax advantage exists and we do not really know how to separate it from the other things.

There are essentially two effects that would result from any scenario around tax reform, not just the one the Deputy mentioned. One is that some of the tax revenue may shift. Companies may pay tax in the United States or elsewhere, rather than in Ireland. The other is that some activities may shift. That is a different impact. Activity shifting has the kind of impact the Deputy has spoken about, in terms of people's employment, the taxes they pay and the money they spend in shops. There are those two effects.

It is much easier for companies to move money rather than assets and the actual underlying activities. Large companies do move those things. The Deputy is right that there are two channels. As I said, the strength very much depends on the detail of the companies and what is agreed. It is important to keep track of those two channels.

A third channel which is important is that the tax that is paid into Ireland is spent by the Government in various areas. That flows back into the economy as well. There is a net inflow of money into Ireland. Most tax is taken from one person in Ireland and used to finance something else in Ireland. This tax is a net flow from the outside. It is quite significant in that case.

I want to come back to a previous point the Deputy made about the lessons of the crisis. Looking back, one thing which has not changed since the crisis is that the budget cycle in Ireland remains very focused on an annual cycle. For example, it is striking that the Sláintecare implementation plan has all kinds of details about what is planned but the budget numbers only cover 2021. One would assume additional allocations will have to be made for it next year. There is no discussion or costing of that. The most up-to-date information we have for costing Sláintecare comes from 2017, which is a long way away.

The focus on the annual cycle leaves Ireland adrift and at risk of not having a medium-term plan, letting things drift and spending revenue as it comes in. As we saw in recent years, corporation tax could be at a different level in the future. Breaking the annual cycle and moving to a more medium term cycle, as the best countries have done, would be helpful. That is one of the reasons we care so much about medium-term forecasting.

A credible medium-term spending forecast could align all of the Departments' spending plans a few years ahead. There would not be much by way of decisions to be made in the budget because we would have a clear medium-term strategy that would help us to avoid having a cyclical movement of public spending because it would be set on cruise control. We cannot have that at the moment because the medium-term spending forecasts are not well founded and built up to allow us to do that. Spending numbers would have to be revised again whenever we next get the opportunity to do so because they are not well founded.

To come back to the Deputy's point on the lessons from the crisis, it is very important for the committee to move away from the annual cycle. Things will always have to be changed a little bit from year to year because lots of things happen, but moving away from the cycle is important and that is why it is important to have a medium-term strategy. We need the forecast that would allow us to do that.