Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Iwill deal with the different points put to me. I will begin with Deputy Farrell’s amendment. The reason I am not in a position to accept the amendment from the Deputy is that I anticipate that the further information we will need to be able model the impact of the OECD changes on our corporate tax revenue will not be available to us until the second quarter of next year at the earliest. The Department will at that point begin the work to revalue the impact of these changes on our corporate tax revenue. As soon as that information is available to me, I will share it with the Government and the Oireachtas. That is work I have always committed to doing. It is a very reasonable request from the Opposition. Government needs to understand the impact of these changes on tax revenue. As soon as we have enough detail to form a view as to what that impact is, we will share that with the Oireachtas.

I will debunk one claim that has developed a little bit of momentum. The claim is that because the rate of corporation tax is going up, so will the amount of money that Government will be collecting. The issue is that this is a two-pillar tax agreement. It is fair to say that if all other things were unchanged, ceteris paribus,a higher rate would yield higher revenue. However, the issue for us is the other pillar of the global tax deal, which involves the reallocation of taxing rights.

We will lose revenue in that pillar. There is a share of economic activity that is currently taxed in Ireland that will move to markets in which either the good is purchased or the service is consumed. When the technical work on that is complete, and we are reasonably confident it will stabilise in a certain way, we will then inform the Oireachtas regarding the impact of that and the money we hope to collect in the coming years.

On the point Deputy Boyd Barrett put to me, when he was speaking I asked my officials to get the information to inform our debate on what the average level of effective tax rates in Ireland at different income levels is. Let us assume for now that in the coming years, we will see the implementation of the legislation that leads to the collection of a minimum effective tax rate of 15% for companies with a global turnover of more than €750 million. I believe that will happen. As we will see the implementation of that deal globally, we will also see that happen in Ireland. It is worth saying that at €25,000, the average effective tax rate in Ireland is 12% to 12.5%. In response to the Deputy's argument that the tax on capital is low, that argument will gain greater currency for incomes of more than €30,000. The Deputy might say that incomes of more than €30,000 should have an effective tax rate higher than 15%. However, it is essential to make the point that for those who are on the lowest incomes in Ireland, their effective tax rates will be lower than a globally collected minimum effective tax rate for the largest companies. The Deputy may underestimate the effect this deal will have on the ability for that tax to be collected. He has claimed - I always respect the way in which he does so - that those who earn the least will pay lower effective tax rates than global capital after this agreement is implemented. I believe that will no longer be the case. In Ireland, the effective tax rates those on low income pay is lower than the minimum effective tax rate in Ireland that corporates pay on average.

I refer to the Deputy's point about intra-group transfers, which I fully accept is an incredibly complex world where vast amounts of money move around within companies. The movement of money within these companies nearly always refers to things that have value. I refer, for example, to rent that is paid on intellectual property and payments that move between companies because intellectual property moves within a company. That intellectual property has value in the first place, and it often has huge value. At least some of the intra-group transfers referred to by the Deputy are due to payments moving within groups because something in turn is moving that has gigantic value. The intellectual property of this century is equivalent to the factories, railways and fixed hard physical capital that was visible decades ago. To suggest that these intra-group payments happen in isolation of economic activity is wrong.

It is also worth noting that the way in which that is, therefore, taxed is through transfer pricing. Due to the work of the OECD, transfer pricing and the rules in relation to it are increasingly harmonised. The transfer pricing rules are increasingly consistent across all jurisdictions. If the Deputy wants us to change that in Ireland and engage in transfer pricing rules that are different from those in other OECD or EU countries, we will be back to square one in our argument. If Ireland were to go on its own in such matters, it would be a source of the very uncertainty or instability that will cause the loss of jobs in our country. The Deputy might argue that that never or rarely happens but he should have a look at the front page of today's Financial Times. Two companies that were once tax resident in Holland have now moved. I do not know what the effect that will have on the Dutch taxpayer or Dutch employment. That is a matter for the Dutch Government. The registration of two companies that were important to the Dutch economy has now changed. The Deputy may be willing to take the risk in relation to really large employers in Ireland and say we could go it alone on issues like transfer pricing but I am not and that is the difference in our views on the matter.

I refer to what Deputy Barry said and the amendment he has put forward. I will offer a counter-view to the different points he made. Big pharma played the role in producing the vaccine. Big tech played the role in the technology that helped most of us move out of the office and work from home. I am not aware of the profit levels private hospitals made in the last year in Ireland, but the private hospital capacity here played a role in having a surge ICU capacity available to us if required.

I am somewhat puzzled by the Deputy's argument. Whenever Deputy Barry and I exchange views in the Dáil or in debates like this, he rarely has a good word to say about the country. He rarely has a good word to say about our public services, housing market, the availability of childcare and good public infrastructure. I genuinely do not think I have never heard him give a positive view about those things. However, he will come into this committee and say that the Ireland about which he does not have a good word to say is the Ireland that is still good enough to keep all these jobs if we jack up the tax rate. Which one is it because it cannot be both?

The Deputy's amendment proposes a 25% tax rate for corporations with more than €800,000 in profit. An awful lot of small Irish companies that pay corporate tax would be shocked to find out that Deputy Barry wants to double the tax rate they pay. Many companies in Ireland which are not big tech, big pharma or the large employers always referred to by the Deputy in pejorative terms would be covered by his proposal. Small- or medium-sized companies that pay corporate tax would get quite the land if they woke up and found out that the Government had doubled their tax rate.

Deputy Barry asserted that incomes have been savaged and jobs have been lost, which will not come back because of the pandemic. Incomes have been protected in this country due to the pandemic unemployment payment and the employment wage subsidy scheme. That does not fit into the Deputy's world view in regard to what has happened in the country, but incomes have been protected. As to the jobs he has referred to that will not come back, of course I regret that for some who were working in certain sectors, the jobs they had are not the jobs they will go back to. There are now 60,000 people on the pandemic unemployment payment. I remember, as I am sure the Deputy does, when more than 600,000 people were on it. I remember earlier this year when nearly 500,000 people were on it at one point.

Regrettably, some may not be going back to the job that they had before the pandemic hit. From the point of view of jobs and income, the country fared far better than the Deputy would have hoped.