John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I welcome the Commissioner to this meeting at which we will discuss our EU corporate taxation strategy and EU investment and growth strategies. The Commissioner is caught for time, so we will go straight to the opening statement, which will be followed by questions from members. We have an agreed format for those.

Mr. Pierre Moscovici:

I thank the Chairman and honourable members. It is a pleasure for me to be here again. I was here a few years ago as finance Minister of my home country, France. Let me begin by offering my thanks for this invitation to discuss the latest developments in the EU corporate tax policy.

Since this Commission took office just over two years ago, we have been working hard to build a fairer, more effective and more competitive taxation framework across Europe. We have been building a new and robust tax transparency framework, with increased openness and information exchange between tax authorities, which is the main option of the global standards in that field. We have agreed binding anti-abuse rules so that countries can better protect their tax bases in response to aggressive tax planning. We have a new EU strategy to promote international tax good governance and to tackle external threats of base erosion and with the common consolidated corporate tax base, CCCTB, we have proposed a major overhaul of corporate taxation to safeguard and strengthen our Internal Market.

We have received the Irish Parliament's negative reasoned opinion on this proposal and I will try to address its concerns ahead of our formal reply in the coming weeks. Furthermore, all of the OECD anti-base erosion and profit shifting measures adopted at global level are now covered at EU level. This is a significant step forward and essential for our international credibility. It is evidence that member states can deliver on their global commitments and also crucial for the strength and coherence of the Single Market.

Each of the initiatives focuses on the twin goals of boosting competitiveness and increasing fairness. It is about competitiveness and justice. Through our transparency rules and anti-abuse provisions we are working to create the level playing field businesses need and for which they asked. For example, our action on the resolution of double taxation disputes responds to the needs of cross-border businesses in the way national measures simply cannot do. By co-ordinating national approaches, we are working to prevent legal clashes, cut administrative burdens and remove tax obstacles for businesses in the Single Market. In short, we are working to create a simpler, fairer and more stable tax environment for companies and member states.

I am pleased to say Ireland has actively contributed to the new EU tax agenda, with a valuable input at each stage on each proposal. It is cautious, as it is supposed to be, on EU proposals in the area of taxation. The Irish have always been fair and constructive negotiators and their contribution to shaping EU policy is valued and appreciated. It is something I experienced directly, having working with the Minister for Finance, Deputy Michael Noonan, for almost five years, first as colleagues as economic and finance Ministers and now in my role as Commissioner.

I say clearly and firmly that the European Commission fully respects Ireland's sovereignty in this policy area. This sovereignty is protected by the treaties and reinforced by the unanimity rule. There is, therefore, no cause for concern on this front. There will not be any threat or attack against Irish tax sovereignty. I argue the contrary, that EU co-ordination on tax matters reinforces rather than threatens national sovereignty. It means that countries can effectively apply their chosen tax rates without being undermined by their neighbours' activities. It prevents companies from exploiting national mismatches to avoid tax and blowing a hole in public finances.

I advocate for co-ordination because it means that governments have a clear legal environment in which to develop their national policies. It puts an end to tensions between national systems which often discourage companies from investing across borders in the Single Market. It also means that member states have strength in numbers when defending their common interests on the international stage. In the absence of such co-ordination in practice, it is not for national governments to decide who pays how much tax but for the biggest multinationals and wealthiest individuals. Unsurprisingly, most of the time they prefer others to pay tax such as workers, pensioners and smaller businesses.

All of this is key when it comes to the common consolidated corporate tax base, CCCTB.

I would like to focus on how we have improved the CCCTB and transformed it into a modern, forward-looking initiative that fully delivers on two priorities, those being, growth and fairness. A previous proposal did not succeed and we understood that there was a need for change. The same causes would produce the same effects. This is a new and improved proposal.

The new CCCTB will be good for growth because, by anchoring business investment and expansion in our Single Market, it will have a positive economic impact on all member states, including Ireland. All of the proposal's original benefits remain, including simplicity, reduced costs, legal certainty and the possibility of loss offset. We have introduced new incentives to reward companies that invest in innovation, a new super deduction of up to 150% will be available to companies investing in research and development and extra support of up to 200% will be given to young, innovative firms and start-ups that are drivers of growth and jobs. The new CCCTB will help businesses to expand without taking on excessive debt.

The allowance for growth and investment addresses the debt bias in taxation by rewarding companies that increase their regulatory bases for financing. This incentive is particularly important for small firms, which struggle to secure loans. The CCCTB will enable them to explore more diverse sources of funding and follow a more secure path to expansion.

The new CCCTB will be good for fairness because it is designed to be mandatory for the largest multinationals, which was not the case with the previous proposal. They will all be subject to the same corporate tax rules, which is the best way to block tax avoidance and deliver fair taxation. Other companies will be able to opt in if they wish, and I expect that many will, given the proposal's benefits. The rate that will apply to the companies subject to the CCCTB will remain a national priority. There is no question, no threat, no issue. The Commission is not going to propose anything that would impact on Ireland's national sovereignty. If the tax rate of 12.5% has to be changed, that will be up to the Irish Government and Parliament. It will not be on the initiative of the Commission. I gave warranties on that previously and will repeat them today. There must not be a false debate or false worries.

Members may ask what is in the proposal for Ireland. I believe that Ireland has much to gain from the CCCTB, especially given today's economic and political climate. First, the CCCTB will bring EU-wide economic benefits. Once it is in place, we expect a 1.2% rise in growth rates and nearly €19 billion in extra investment across Europe. That is good news for all countries.

Second, the CCCTB has much to offer Ireland specifically. As a dynamic and open economy in addition to being a gateway to the Single Market for many large companies, Ireland will also be able to offer smaller businesses a simple and stable tax system that applies to the entire EU. Ireland will be able to ensure that companies can enjoy a long-term, sustainable tax framework that fits their businesses and needs. These benefits, combined with Ireland's 12.5% corporate tax rate, can make this country an even more appealing investment location.

Third, Irish businesses that want to operate across borders will face fewer costs, less red tape and greater rewards for their innovative activities.

This gives an important boost to domestic companies.

I know that Ireland's primary concern lies in the second step of the process, namely, the consolidation and apportionment formula. The proposal is designed in such a way that the full benefits of CCCTB will only come through when both the common base and consolidation are implemented. Businesses have called for consolidation. We see this as a vital tool for completing this simple, fair and effective tax framework. Even if the two-step approach of common base followed by consolidated is taken the proposal will remain a three Cs proposal. What is on the table at this stage is the Commission proposal. I insist on it being called "a proposal". This means that it is a starting point for negotiations. Proposals are not decisions. They can always be improved during the legislative process, responsibility for which lies with the member states. The Commission believes in issuing proposals. I will defend this proposal strongly because I firmly believe it is good for all member states for the reasons I have set out.

There is no denying that consolidation is complex. I know that intense discussions will be needed to reach a final deal. I am aware that Ireland will use its voice actively and, I trust, constructively to help shape consolidation in a way that works for everyone. All voices are equal. I am sometimes asked if there are big countries and small countries inside the EU. That is certainly not the case, especially in the field of EU tax policy where no member state can be over-ruled. There must be unanimity. In other words, all members states, without the exclusion of any country, must agree. The committee can be assured that there will not be a CCCTB if Ireland does not want it. This means I will have to work on compromises, in respect of which I will work constructively with the Irish Government and its Parliament. Ireland has done a lot to reform its corporate tax system and to show that it is committed to fair taxation. It has also been an active contributor to the EU agenda. I urge it to continue to do so in the spirit of consultative co-operation, which was the spirit of my last meeting with the Minister for Finance, Deputy Noonan, last Friday in Davos. We will meet again at the end of the week in the framework of the Eurogroup and ECOFIN.

Ireland's success, growth and competitiveness boosts the Union as a whole and reciprocally, a fairer, stronger, more competitive EU makes Ireland stronger too. I know that Ireland is pro-European, which, to me, is right. I look forward to hearing members views and comments and to discussing with them what the EU can do to further support the needs of Irish businesses and the Irish people, because all this is done in order to create jobs and a better life for our EU and Irish citizens.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank the Commissioner for his opening statement.

Michael McGrath (Cork South Central, Fianna Fail)
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I welcome Commissioner Moscovici and his colleagues to the meeting. I have two questions for him, one on Brexit and one on CCCTB. The Commissioner stated in Davos last week that the talks between the EU and the UK on a new trade deal could only commence after the UK has left the European Union. A major concern for Ireland is the risk of a cliff effect after the two-year period following the triggering of Article 50. If there is no interim or transitional trade deal on issues directly under the Commissioner's remit, including taxation, customs and so on, this could have serious damaging consequences for Ireland.

Can the Commissioner clarify his comments that the talks on a trade deal between the UK and the EU will only commence after the UK has left? How does it relate to a transitional deal that Mr. Barnier, the chief negotiator, has indicated is a possibility?

Mr. Pierre Moscovici:

On 12 October the chief negotiator visited Dublin to hear the Government's view of Article 50. He has clearly said that an agreement on an orderly exit is a prerequisite for a future partnership with the UK. What I meant to say, and what I said precisely, was purely logical. One cannot comment or speculate on the outcome of the negotiations before it has commenced. There will be no negotiation before the notification of Article 50. No more, no less. Everybody is free to discuss and nobody can forbid discussion but negotiating is quite different.

The Commission will defend the interests of the 27 member states - all of them and each of them. The Commission has the idea, as Madame May has said, that Brexit is Brexit. It means that when one is not a member of a club one does not have all the advantages that club members enjoy. We know that she chose not to stay in the internal market, which means that we will have to redefine a new co-operation in terms of trade and customs. This will have to be done in an orderly and timely manner. I cannot comment on the outcome and I do not want to create a worry. I commented on the framework, timing and legal constraints. It is clear that we will look for technical solutions to have swift procedures in order to continue trading and exchanging with the UK in the future. During the process the Commission will be treat with sensitively the relationship between Ireland and the UK and the specific situation of Northern Ireland. We will work hard to ensure that nothing is done to undermine the hard won peace generated by the Good Friday Agreement.

Michael McGrath (Cork South Central, Fianna Fail)
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Is it the Commission's objective that after the expiry of the two-year period there will be no cliff effect when the UK leaves the European Union? As there is no trade agreement in place is the default position the WTO's terms of trade? Such terms would have serious negative consequences for Ireland. Will an arrangement be put in place once the UK leaves so that trade continues smoothly and competitively?

Mr. Pierre Moscovici:

Transitional arrangements are possible and they might be wished for but for such arrangements to make sense we need to know what we will transition to and to define it we need to know the global picture. We are unwilling to have a cliff at the end. We want an orderly Brexit and for us to have a friendly and co-operative relationship with the UK. The UK has chosen not to be a member of the EU but remains a European country and a strategic partner. What we mean is that there cannot be a bridge to nowhere. The destination needs to be clarified first but, certainly, a good destination is not a cliff.

Michael McGrath (Cork South Central, Fianna Fail)
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On the issue of the common consolidated corporate tax base, CCCTB, the Irish objection is not just based on how profits are allocated across EU member states for taxation. The calculation of the base itself, from the analysis that we have conducted, will result in a much narrower base compared with the current and much broader Irish calculation of taxable profits.

There is huge concern about the allocation of these profits on the basis of where the sales occur, where the assets are held and where the employment is based. We are coming from the perspective of a country where 80% of corporation tax receipts are raised from the multinationals sector. We have an enormous amount to lose if this goes wrong. Our current assessment is that it will potentially be very damaging for Ireland. Mr. Moscovici has said each country will retain sovereignty over its tax rates, but he has also said countries can only apply one tax rate. In Ireland we have the headline rate of 12.5%, but we also have a 25% rate for non-trading income and a 33% rate for chargeable or capital gains. These rates will go under the Commission's proposals. This seems to be a significant encroachment on our national sovereignty and competence in the area of taxation.

That is a very brief summary of my concerns and those of my party about these proposals as currently constituted.

Mr. Pierre Moscovici:

We might have differences which we would need to discuss in a very precise manner. Our assessment is not the same. The Irish tax base and the common base in terms of the CCCTB are roughly the same size. The impact the apportionment formula will have on individual member states' tax base will need to be looked at closely during the Council negotiations. Any technical analysis Ireland, through its Government and Parliament, can provide will be very welcome so long as it is based on the proposals now on the table. Previous analyses were based on assumptions about the 2011 proposals, but we are now dealing with different proposals. In any case, we need to discuss the issue. I repeat that we are at the starting point of the negotiations and cannot jump to conclusions. It is clear that what I am looking for is a compromise and that a compromise cannot be based only on the ideas of the Commission. I am taking an open-minded approach.

The fact that Ireland has different tax rates is unusual within the European Union and it is true that this will change with the CCCTB. There will be only one taxable profit figure to be taxed at whatever rate the member state chooses to set. However, member states' sovereignty is still protected because each member state will have full control in setting that rate. We always refer to the 12.5% rate because it is the crucial one, but there is absolutely no threat to it. I believe Ireland's other two corporate tax rates apply mostly to passive income and capital gains and that they generate much less tax revenue. If Ireland wants to keep these additional rates for companies outside the CCCTB system - it is mandatory for the big ones but optional for the others - it will, of course, be free to do so. However, within the CCCTB system companies will appreciate the simplicity of having a single national rate. Ireland might also judge this to be appropriate, but again, I repeat, this is the starting point for the discussion. I want to make it clear that it is not a threat to the Ireland's sovereignty as far as tax policy is concerned.

Michael D'Arcy (Wexford, Fine Gael)
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I welcome the Commissioner. Following on from what Deputy Michael McGrath said, has the Commission carried out an analysis of the likely impact on Irish GDP if the proposal is agreed to? Are data available for the potential impact on Irish GDP?

Mr. Pierre Moscovici:

I would need to check, but my memory is that the potential impact has been assessed and that it is very slightly negative, something like 0.2%, but it has to be compensated for by other effects.

There would be 1.2% growth at EU level which would represent in the order of €90 billion and overall it would be positive.

Michael D'Arcy (Wexford, Fine Gael)
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Not for Ireland but at EU level.

Mr. Pierre Moscovici:

If it is positive at EU level, it would be positive for Ireland.

Michael D'Arcy (Wexford, Fine Gael)
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Has Mr. Moscovici carried out an analysis of the potential reduction in the Irish tax take?

Mr. Pierre Moscovici:

No. We did not do that.

Michael D'Arcy (Wexford, Fine Gael)
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Is Mr. Moscovici aware that in 2011, in the previous incarnation of CCCTB, that Ernst & Young's analysis was that it would have a substantial disproportionate negative effect on small states?

Mr. Pierre Moscovici:

Is Deputy D'Arcy referring to a previous proposal?

Michael D'Arcy (Wexford, Fine Gael)
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Yes.

Mr. Pierre Moscovici:

We need to assess that on the basis of the new proposal. We are ready to have exchanges of views with the Government and Parliament of Ireland.

Michael D'Arcy (Wexford, Fine Gael)
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Is Mr. Moscovici aware of the previous proposal of Ernst & Young?

Mr. Pierre Moscovici:

Yes, of course. However, this is a new proposal.

Michael D'Arcy (Wexford, Fine Gael)
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Is he aware there would be a likely benefit for the larger states and an impact on the smaller states, that is, going back to 2011?

Mr. Pierre Moscovici:

Again, I am not talking about the 2011 proposal.

Michael D'Arcy (Wexford, Fine Gael)
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I am aware of that. I will move on. It has effectively been relaunched at a time of major uncertainty on the Continent. Brexit will have a larger impact on the Irish State than any other country in the European Union. If the CCCBT is implemented post-Brexit, without further analysis of the data, is that not simply asking Irish people to close their eyes, hold their breath and hope for good luck?

Mr. Pierre Moscovici:

The negotiations for CCCBT will happen now with the UK Government around the table. If the timetable is respected, it will be adopted in 2028.

Michael D'Arcy (Wexford, Fine Gael)
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Would there be flexibility in regard to the corporation tax rate for the larger companies with turnovers of more than €750 million? Would there be flexibility for Ireland to increase its corporation tax rate for those companies following Brexit, if required?

Mr. Pierre Moscovici:

I cannot say anything about what follows Brexit for the reason I mentioned before.

Michael D'Arcy (Wexford, Fine Gael)
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Let us ignore Brexit.

Mr. Pierre Moscovici:

We would have a single tax rate.

Michael D'Arcy (Wexford, Fine Gael)
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Would it be for those companies?

Mr. Pierre Moscovici:

Yes.

Michael D'Arcy (Wexford, Fine Gael)
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Is Mr. Moscovici aware of the-----

Mr. Pierre Moscovici:

Let us be clear. The Deputy is asking a lot of very precise questions. All the answers are in the proposal. This is a proposal, it is not a decision.

Michael D'Arcy (Wexford, Fine Gael)
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I understand that. I am trying to establish the views of Mr. Moscovici on the proposal. I am sure the proposal can be altered with negotiation but I would like to hear Mr. Moscovici's views on it. Will there any leeway during negotiations for changes in the corporate tax rate for the companies generating a turnover of more than €750 million?

Mr. Pierre Moscovici:

Everything is on the table. The proposal is the starting point. That means we would welcome any contribution, which would lead to a positive outcome, from the Irish Government. The proposal is open to amendments. What I am looking for is a compromise; the proposal is a starting point.

Michael D'Arcy (Wexford, Fine Gael)
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Is the CCCTB not an attack on Ireland's sovereignty?

Mr. Pierre Moscovici:

No, it is not.

Michael D'Arcy (Wexford, Fine Gael)
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If there is an agreed single fixed corporate tax rate following the negotiations, Ireland would not have the opportunity to raise its corporate tax rate for larger companies?

Mr. Pierre Moscovici:

Yes, of course, Ireland would.

Michael D'Arcy (Wexford, Fine Gael)
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Even if the rate is fixed and agreed initially.

Mr. Pierre Moscovici:

It is not, in any way, a threat to Irish sovereignty. I answered Deputy Michael McGrath's questions on the tax rates very precisely.

Michael D'Arcy (Wexford, Fine Gael)
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The CCCTB proposal runs to approximately 40 pages. How does Mr. Moscovici propose to tie in the corporate tax details of the 27 member states in a document that currently comprises 40 pages?

Every country has thousands of pages of tax law which are all interpreted in their own manner. I do not see how a document of 40 pages can cover such a crucial decision under which each country is making a tax concession to the Commission.

Mr. Pierre Moscovici:

In my experience, having also been a finance Minister and an MP for almost 20 years, people appreciate it when we do things that are clear enough. I would not call for a document of thousands of pages. Usually, people criticise us for having too much bureaucracy, not too little.

Michael D'Arcy (Wexford, Fine Gael)
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In this case-----

Mr. Pierre Moscovici:

In this case, it is about the common framework. It does not cover all tax legislation and we are lucky that is the case.

Rose Conway Walsh (Sinn Fein)
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In the limited time available I would like to ask a few specific questions. On Brexit, if Britain leaves the European Union without a trade deal, will the World Trade Organization tariffs apply? Specifically, will they apply to trade between the North and the South of Ireland?

Mr. Pierre Moscovici:

I think I answered that question. Again, I do not want to speculate, but I gave the spirit of the negotiator.

Rose Conway Walsh (Sinn Fein)
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Does Mr. Moscovici envisage the WTO tariffs being applied to trade between the North and the South?

Mr. Pierre Moscovici:

I am again sorry to say I cannot comment on the outcome of negotiations that have not yet started.

Rose Conway Walsh (Sinn Fein)
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I am sure Mr. Moscovici can imagine how significant the issue is to us.

Mr. Pierre Moscovici:

Yes, but let us not be in a "What if?" position as that is not the right way to start negotiations. We want the negotiations to be concluded fast and in better conditions. We are not looking for plan B, plan C or catastrophe scenarios.

Rose Conway Walsh (Sinn Fein)
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The Commissioner will have to forgive us as we were in this position at the time of the banking crisis when we had very little sovereignty and little to use in defending ourselves as a country and we do not want the same to happen again. As legislators, we have a responsibility to make sure every "i" is dotted and every "t" is crossed to ensure the Irish people will be protected from the European project having regard to what happened previously.

Mr. Moscovici has been quoted as saying Ireland cannot even discuss post-Brexit customs arrangements with Britain, while the European Commission states it understands Ireland's position. However, it does not seem to understand this is a divided country and that the national priority is to prevent a hard border from re-emerging to re-cement the Border. I again ask what it will do to stop Ireland from talking to Britain at that stage?

Mr. Pierre Moscovici:

As I said, everybody can discuss with everybody. I am talking about the legal framework that is common to us. Ireland is not a third country. It is a member of the European Union and the eurozone. Our negotiator, Mr. Barnier, who was here, will negotiate and act in the name of the 27 member states, each and all of them. Of course, we will always act under the control of the European Council and the Council at its various levels; there will, therefore, be constant control from the Council to the Commission and from this Parliament to the Council through the Irish Government.

I will say one last word. We are certainly not trying to re-establish a solid border. If I was understood in that way, I was misunderstood. We know that this is a divided a country. I said precisely the contrary, namely, that we would take on board the specific situation of Northern Ireland in the negotiations.

Rose Conway Walsh (Sinn Fein)
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The devil will be in the detail in that regard.

Again, Mr. Moscovici will forgive us because as late as today we see in respect of the rate of inflation in Germany what may need to be done in adjusting quantitative easing within the European project. We are looking at how it will impact on us in terms of interest rates and so on.

Which of the following options does Mr. Moscovici see as realistic if Britain leaves the customs union? Does he envisage a customs post on the Irish Border or no customs posts in Ireland but customs posts on the island of Britain, or a customs border between the European mainland and the islands of Britain and Ireland? Does Mr. Moscovici have a preferred option?

Mr. Pierre Moscovici:

Mr. Barnier is the negotiator and I am not going to speculate on the outcome of the negotiation before it starts. We are a collective body and we define our position collectively under the control of the Council.

Rose Conway Walsh (Sinn Fein)
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There are many more questions than answers. This Parliament has already given its view on the CCCTB to the effect that it goes too far and is not necessary. That is the view of the great majority of Members of this Parliament but Mr. Moscovici is here on a charm offensive to sell the CCCTB. His scouts who were here recently, however, gave the game away to this committee when they said it would change our corporate system in a very fundamental way. We would have to adopt a single rate of corporate tax, albeit one that could be compatible with our 12.5% rate. Is that the case?

Mr. Pierre Moscovici:

I would not say I am here on a charm offensive.

Rose Conway Walsh (Sinn Fein)
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You are doing a good job if you are.

Mr. Pierre Moscovici:

I am just trying to convince and to develop the position. Members should enter into the discussion with an open approach. I do not say it is perfect or the end of the game but it is a proposal. It has advantages and benefits for the whole of the Union and for Ireland too. I will be open to proposals, to amendments and to improvements and I will listen to and take into account the remarks of the Irish Government and the Parliament. In the end it is they who will decide, not I.

People often think the Commission is the government of Europe and that there is a kind of diktat from Brussels. There is no diktat. There are proposals and we are not the government of Europe. We are the driving force for the general interest but it is the member states who decide, through the Council. In tax matters it is by unanimity so if Ireland does not want the CCCTB it will not happen. It must, however, look carefully and precisely at the new proposal to see how different it is from the previous and what the advantages could be, as well as what improvements can be made to it. I understand that there are worries and preoccupations about specific aspects. There will not be any harm to Irish tax sovereignty.

Rose Conway Walsh (Sinn Fein)
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Why was the original proposal presented if it was going to be so detrimental to the Irish economy?

Mr. Pierre Moscovici:

I think it was a quite good proposal. It was discussed in the Council but agreement could not be reached. The Commission had three options. If we had put forward the same proposal the response would have been the same. We had to take on board specific remarks made by the Irish and when I speak to my Irish counterpart, Deputy Michael Noonan, he agrees that the new proposal is a different proposal, though I would not want to say it is his proposal. The second option would have been to renounce but we did not want to do that because we think the proposal is good in terms of fairness, simplicity, anti-avoidance and business. The third option was to propose a new CCCTB and that is what is on the table. It is not, however, the end of the story but the beginning of the discussion, as is the case with Brexit.

Seán Sherlock (Cork East, Labour)
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I welcome the Commissioner, Mr. Moscovici, to our committee. I will start by making a political point.

As a former Member of Parliament and a former Minister, the Commissioner will take a reading from this meeting of the Irish Parliament's Joint Committee on Finance, Public Expenditure, and Taoiseach today. The mood thus far is one of a degree of scepticism about this proposal because too many questions are left unanswered on how it will affect our ability, for instance, to attract foreign and direct investment. We take the Commissioner's intervention in good faith and the proposal is that there would be a 1.2% rise in growth across the European Union and €90 billion in extra investments.

If we are inhabiting a political space in which there is the rise of the extreme right and of populism, there is a school of thought that would say that if there is a proposal that seeks to undermine sovereignty, or even the perception of sovereignty - I note the Commissioner's colleague is nodding her head - and there is a perception of a diminution of Ireland's ability to maintain its sovereignty as it relates to taxation measures, I would suggest it is ill-timed.The focus of the Commission's agenda or policy outcomes should not be to examine the consolidated tax base but to examine the Stability and Growth Pact. If a country like Ireland has the sword of Damocles in terms of Brexit handing over it, where there is a degree of uncertainty and nobody can definitively answer questions from a macro-economic point of view on how Brexit will affect small countries like Ireland because the negotiations de factohave not been concluded, and if there is a proposal on top of that which creates the perception that Irish people's sovereignty as it relates to their tax affairs is undermined in any way, then the Commission is adding to a degree of euroscepticism, notwithstanding the EUROSTAT poll numbers on Ireland's relationship with the European Union. It should be concentrating on matters such as the Stability and Growth Pact instead. If we consider rules such as the excessive deficit procedure, the balanced budget rule and the six pack, what Europe needs if we are to have a 1.2% rise in growth is a greater degree of flexibility with respect to the Stability and Growth Pact as it relates to countries like Ireland, which is currently very constrained and is seeking changes to the rules to ensure that it can start making investments in infrastructure and the capital investments that will add to and fuel growth in the economy.

We are not a eurosceptic country. I inhabit the centre left. My group within the European Parliament has put forward proposals for a relaxation of Stability and Growth Pact rules. We want to see growth happening. If those of us who champion the EU want to see it sustained against the rising euroscepticism and increasing populism that we see, we have to see reforms. I put it to the Commissioner that reforms come in allowing for greater flexibility with respect to the Stability and Growth Pact. That is my main point. I hope that as a former Member of Parliament and a former Minister, the Commissioner will be able to give us some insight from that perspective. He will have to wear his Commissioner hat at the same time but I put it to him that growth in Europe is predicated on a greater relaxation of the Stability and Growth Pact rules.

Mr. Pierre Moscovici:

This Commission has been defined by its President, Jean-Claude Juncker, as a political Commission. That does not mean that we are politicised and working in an arbitrary manner but we are men and women who happen to be former Prime Ministers and former Ministers. I have been a Member of Parliament and a Member of the European Parliament and a Minister for seven years and now I am a Commissioner. I have worked at all sides of the triangle of the institutions, the European Parliament, the Council and the Commission. I can assure the Deputy that I am as worried as he is about the race to populism but I would look to the grassroots of that populism.

I would not say it is about this or that proposal but about a lack of jobs, growth that is too slow, too much debt and the fact that the economy of the eurozone is in recovery. However, it is too slow and we seem to be losing ground in competitive terms. In particular, we need to create jobs. It so happens that I am also Commissioner for tax as well as for implementation of the Stability and Growth Pact which I would not oppose. What I am trying to do as a Commissioner is to create jobs through tax as well as fiscal policy.

Members must tell me if some questions are unanswered as I agree that would not be satisfactory. We are at the beginning of a discussion and if at the end all of the questions have not been answered, we will not have a compromise. Where I differ is that I do not believe we should withdraw this proposal. I think we should take it as a starting point - a rather interesting and good starting point - and try to improve it together. When I say "together", I mean the Commission and member states through their governments controlled by their parliaments. If I was not deeply convinced that this proposal is capable of creating jobs, ensuring fairness and having a better fight against tax evasion and tax fraud, I would not submit it, but I am convinced that is the case. I do not say it in order to charm the committee; the only thing I expect from the Irish Parliament today is that it will enter into it without a principled refusal, that it will consider and discuss it and that we will improve it together. In the end, let us see whether we can move on. That is not in contradiction with what members have said about the Stability and Growth Pact.

In terms of the proposal, I am proud that the Commission, under the leadership of President Juncker, introduced more flexibility in its interpretation of the Stability and Growth Pact. As soon as it came into force we established on 13 January 2015 a communication of flexibility to encourage those countries with structural reforms, difficult investment conditions, which were suffering from earthquakes, as our Italian friends did several times, or on the front line in welcoming refugees. There will still be improvements, but there is one thing I wish to reiterate, that is, that while we can introduce flexibility in the Stability and Growth Pact, we cannot have flexibility against it.

Seán Sherlock (Cork East, Labour)
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Okay, because-----

Mr. Pierre Moscovici:

I am here to ensure full respect-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We are running out of time.

Seán Sherlock (Cork East, Labour)
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I have only made one or two points.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I have to call the next speaker.

Mr. Pierre Moscovici:

The Deputy's question was quite comprehensive.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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He used his five minutes very well.

Seán Sherlock (Cork East, Labour)
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The Commissioner's answer was quite comprehensive, too.

Paul Murphy (Dublin South West, Anti-Austerity Alliance)
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First, I do not agree with the majority position in the committee or the position of the Parliament. Our group, the Anti-Austerity Alliance-People Before Profit, voted against it in the Parliament because we think tax avoidance is one of the major scandals of our age. It is a major contributory factor to the inequality which sees eight people in the world own the same as the bottom 50% and Ireland functions as a key link in a chain of global tax avoidance, in reality as a tax haven for companies such as Apple, Google, Facebook and others. The CCCTB could be part of an answer to the problem, the major problem being the apportionment as proposed. The emphasis is on sales. Giving one third to sales seems to have no theoretical basis whatsoever. It should be on the basis of where value is created, which is related to labour. We might come back to that matter.

The first question I wish to ask relates to the FAQ about the proposal in which the Commission states it will reduce the level of harmful tax competition.

Would the Commissioner regard Ireland as a country engaged in harmful tax competition?

Mr. Pierre Moscovici:

The Deputy said that Ireland was a tax haven. I do not share that view. Huge progress has been made here in the implementation of global standards. We do not believe that Ireland engages in harmful tax competition. Our state aid decision indicates that Ireland did not always play fair in the past, nor did certain other member states. I must say, however, that Ireland has done impressive work in recent years to tackle tax avoidance and to support the agenda for fairer taxation. The phasing out of the "double Irish" arrangement is crucial, along with the legal change on stateless companies. I am also impressed that Ireland has been a leader on some of the base erosion and profit shifting, BEPS, actions. For example, Ireland legislated for country by country reporting to tax authorities, even before we proposed it at European Union level. Ireland is also one of the few member states to have mandatory disclosure for advisers, which I will propose for the entire EU later this year, so it anticipated actions we intend to propose. As Commissioner, I have to answer questions from the Panama committee on the post-Panama papers, and this is something which is asked by them.

This constructive approach to corporate tax reform is very positive, both for Ireland's international reputation and its long-term economic sustainability. That is linked to what I said earlier on common consolidated corporate tax base, CCCTB. I believe Ireland has nothing to fear from that kind of proposal. Its sovereignty is respected enough and its attractiveness is global enough to benefit from that.

Paul Murphy (Dublin South West, Anti-Austerity Alliance)
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I will be concrete as to the reason I believe the Irish Government would be concerned about the CCCTB. In terms of those who play the game of the mismatches between tax systems, would lawyers, corporate lawyers and accountancy firms not lose out? They are a major element in this, and they have political weight. Is it the case that those corporate lawyers and accountants who are engaged in that would likely lose out as a result of the CCCTB if there were not the mismatches?

Mr. Pierre Moscovici:

I am not an Irish citizen. I do not have to judge that.

Paul Murphy (Dublin South West, Anti-Austerity Alliance)
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The Commissioner spoke at a corporate tax event today the title of which was Ireland Vs The World. That gives one a sense of how sections of the elite in Ireland see this question of tax competition.

Mr. Pierre Moscovici:

If the Deputy had been there he would have heard me say in my introduction that I did not take the title for granted or want to be provocative. I want Ireland to be in the centre of the world, not against the world, and especially in the centre of Europe where it belongs.

Paul Murphy (Dublin South West, Anti-Austerity Alliance)
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Would the Commissioner agree that in terms of the model of tax competition, and this goes beyond the question of the CCCTB, which the Irish Government at times advocates - it is part of what is described as an industrial policy but in reality it is a policy of tax competition - the space for that policy is dramatically restrained by two events, namely, the prospect of a so-called bargain basement Brexit by Britain under the Tory Government and President Trump's corporate tax proposals? Would he agree that those events limit the space to continue with that model?

Mr. Pierre Moscovici:

Brexit and President Trump's policy are two events on which I do not want to anticipate too much, but we have to have that in mind when we reflect on the future.

Paul Murphy (Dublin South West, Anti-Austerity Alliance)
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The apportionment of one third of profits by reference to sales is irrational. It leads to an element of double counting because the countries already get a benefit from VAT and it clearly benefits the bigger economies with no justification because it does not relate to value being added - real production that leads to profits. What is the justification for one third going to sales?

Mr. Pierre Moscovici:

In our view, sales by this nation reflect better where profits are generated, that is, where the sale is made. Sales by origin could be very easily abused by companies seeking to avoid taxation. I understand that is one of the Deputy's major concerns. For the two other factors, namely, assets and staff, it makes more sense to look at where they are based, that is, origin.

This is a point I wanted to explain. It is in the proposal.

Paul Murphy (Dublin South West, Anti-Austerity Alliance)
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The profit is not created at the point of sale, it is realised. The profit has already been made in the sense that value has been added to the product by a combination of different forms of labour, including intellectual property.

Mr. Pierre Moscovici:

Sales by origin better reflect where profit is generated.

Peter Burke (Longford-Westmeath, Fine Gael)
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I thank the Commissioner for taking the time to come here. From listening to the other speakers, am I correct that the Commission has not done its scoping exercise regarding how much the corporation tax take in Ireland could potentially reduce if the CCCTB was to be brought to fruition?

Mr. Pierre Moscovici:

We have not made a precise assessment country-by-country. We can improve that.

Peter Burke (Longford-Westmeath, Fine Gael)
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The answer is "no" then.

Mr. Pierre Moscovici:

We have an estimate. Our impact assessment focused on the EU as a whole. The overall outcome is positive, up to 1.2%. We cannot do detailed modelling for every member state at this stage. This is largely due to a lack of technical data. The figures in the impact assessment are based on a model that applies the CCCTB in a neutral budget way. Crucially, the figures concerned do not take into account many of the positive impacts of the CCCTB. They are without any dynamics, such as the impact that increased growth in employment will have on tax revenues. Even excluding these positive factors, and with the limitations I have mentioned that need to go, the estimated impact on Irish tax revenues is considered to be very small, -0.2%, and will be positive.

Peter Burke (Longford-Westmeath, Fine Gael)
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A number of the leading institutes dealing with taxation in this country have done exercises which are very worrying. Some of them have presented their findings to the committee in terms of the impact the CCCTB could have on Ireland. It is clear that the work has not been done on how this could adversely affect the State. A huge amount of the mismatches in terms of taxation and lost revenue occur not only because of a member state, but because a third country is involved. How does the CCCTB solve the problem of a mismatch involving a third country?

Mr. Pierre Moscovici:

We will have to examine our own estimates and make them more precise. Again what we lack is technical data. We need to exchange views. We are ready to address the estimates which the Deputy has mentioned.

Peter Burke (Longford-Westmeath, Fine Gael)
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My time is very limited Commissioner-----

Mr. Pierre Moscovici:

Regarding mismatches, the conclusions of the anti-tax avoidance directives are invoked in the CCCTB proposal.

Peter Burke (Longford-Westmeath, Fine Gael)
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As it is laid out in the draft proposal from 2011, which has now been refurbished and brought back on the system, the CCCTB will not, and in a way cannot, have any impact on the multi-million and multi-billion euro corporations which are operating in third jurisdictions outside the member states. It will not have any impact on those, and it is not solving that problem, which the EU is hugely concerned about. The Commission has, rightly, engaged with us as a country very forcefully and robustly as of late to close tax loopholes. We have been a leader in dealing with base erosion and profit shifting. It is very concerning that the Commission is proposing to solve a problem, which it is not.

Mr. Pierre Moscovici:

What the Deputy is talking about does not concern the CCCTB, it concerns the anti-tax avoidance directive-----

Peter Burke (Longford-Westmeath, Fine Gael)
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I want to be clear. This does not do anything to solve that.

Mr. Pierre Moscovici:

-----which has been precisely discussed in the Council. We are expecting a consultative approach from Ireland.

Peter Burke (Longford-Westmeath, Fine Gael)
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This does not do anything to solve that. Reading through the Commissioner's speech, it is very difficult to reconcile when he says that it will have no impact on sovereignty but is using terms around putting an end to the tensions between national systems and member states having strength in numbers. If this base was agreed, how could High Court decisions on tax in this country be sustainable if they affect yields in France and Germany? The sovereignty of the country would be totally eroded if this proposal were to come to fruition.

Mr. Pierre Moscovici:

This is a fundamental political debate. I repeat that nothing erodes national sovereignty of Ireland as far as tax is concerned.

However, I would not oppose sovereignty and co-operation. Therefore, one can, with one's own sovereignty, decide to co-operate with others.

Peter Burke (Longford-Westmeath, Fine Gael)
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We are clearly deviating from our capacity as a country to set the rules, in terms of responding to economic issues that happen in a country. As I pointed out, one of the core parts of the way we govern, our courts system, would be totally watered down in this proposal.

Mr. Pierre Moscovici:

That is the basis of what we are trying to do, not only on that tax but on all tax legislation.

Peter Burke (Longford-Westmeath, Fine Gael)
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It would be a consequence of it.

Mr. Pierre Moscovici:

If we want to tackle the cross-border problem, which is a complex one, and also cross-border tax avoidance, we cannot combat that alone. That implies, with full respect to our national sovereignty, we combine our efforts.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Five members have indicated but we will not have time. Perhaps Senator O'Donnell could focus on a question that has not been asked.

Kieran O'Donnell (Fine Gael)
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I welcome the Commissioner and his colleagues. I have a few quick questions I wish to ask. At The Irish Times corporate tax summit, Mr. Moscovici said that the UK's post-Brexit arrangement with the EU must be inferior to membership of the EU. Can he elaborate on that, please?

Mr. Pierre Moscovici:

It is very simple. Brexit means Brexit. I did not say that; Madame May said it. That means that when one is no longer a member of the club, one does not have all the advantages of belonging to the club. It is just a general remark that one cannot have the best of both worlds, so we will defend the interests of the EU.

Kieran O'Donnell (Fine Gael)
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I watched the proceedings. The Commissioner is a very specific man. He might indicate how it will manifest itself and what will be the make-up of the arrangement.

Mr. Pierre Moscovici:

I am not going to comment on the outcome of a negotiation that has not started. Our starting point is that we are defending Europe.

Kieran O'Donnell (Fine Gael)
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One cannot make-----

Mr. Pierre Moscovici:

Maybe I could just finish my sentence.

Kieran O'Donnell (Fine Gael)
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It is not a sticking point.

Mr. Pierre Moscovici:

We are defending the interests of the 27. Madame May and her Government will defend the interests of the UK. In the end, we need to have a good, co-operative, friendly relationship that will not be the same, and with the same quality, as membership.

Kieran O'Donnell (Fine Gael)
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What does Mr. Moscovici see as the primary areas where that will change?

Mr. Pierre Moscovici:

Again, we will see that during the negotiations.

Kieran O'Donnell (Fine Gael)
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What is most likely?

Mr. Pierre Moscovici:

I am not going to be the "What if guy" here.

Kieran O'Donnell (Fine Gael)
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Mr. Moscovici stated that no customs borders discussions can take place with the EU until two years have elapsed and the UK is no longer part of the EU. Is it not putting the cart before the horse with the CCCTB? Should any such discussions, in themselves, not be effectively parked until the make-up and fall-out of the Brexit arrangements with the EU and the UK have taken place?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That has been dealt with already, Senator.

Kieran O'Donnell (Fine Gael)
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Has it?

Mr. Pierre Moscovici:

I do not see where the contradiction would lie. We are talking about two very different things. The CCCTB will be discussed with the UK.

Kieran O'Donnell (Fine Gael)
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Mr. Moscovici said he believes that Ireland will benefit from the CCCTB. Is it fair to say that about countries with large export aspects to their economies? Our exports are over 120% of our GDP, unlike many of the other countries in Europe. How do we gain from CCCTB if a substantial portion of those exports are going into the Commissioner's home country, France, as well as Germany and elsewhere in mainland Europe?

Mr. Pierre Moscovici:

It is true that I am French but I am not acting here as a Frenchman.

Kieran O'Donnell (Fine Gael)
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Some might say that the Commissioner is.

Mr. Pierre Moscovici:

The apportionment formula is based on a tried and tested formula, which has been used in the USA, as well as being shaped in Canada and Japan. Given that the factors are directly linked to where profit is generated, it fairly reflects where the value is created. It is also very difficult to manipulate in terms of companies that want to evade taxation.

The Commission has put forward what it considers to be the best proposals for all member states, large and small.

Kieran O'Donnell (Fine Gael)
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With all due respect, I have very little time. My question was specific. The Commissioner is running down the clock.

Mr. Pierre Moscovici:

I have answered the Senator.

Kieran O'Donnell (Fine Gael)
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A large proportion of the weight of the CCCTB system will be on where sales take place. If they are taking place outside Ireland, particularly for multinationals, how will we gain from the CCCTB system? It will undermine-----

Mr. Pierre Moscovici:

I will answer the Senator again that it is equal for so-called small and large member states. The final decision lies with the member states; there will be unanimity. Every member state has an equal voice and nobody can-----

Kieran O'Donnell (Fine Gael)
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With due respect, if one is taxing the very small profits made in Ireland, it will make no difference what one's tax strategy is as one's tax take will go down significantly. Tax will be earned by the country in which the sales take place. As such, how can the Commissioner say the CCCTB system will benefit a small open economy - there is none more open than Ireland in a European context - when the bulk of the taxes from multinational companies will now be collected in the countries in which the sales take place?

Mr. Pierre Moscovici:

We believe the tax rate, plus certainty, will be superior for export based taxes such that it will benefit the Irish economy.

Kieran O'Donnell (Fine Gael)
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With due respect-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am sorry, but I call Senator Gerry Horkan.

Kieran O'Donnell (Fine Gael)
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The Commissioner has not answered the question.

Mr. Pierre Moscovici:

It will have more benefits than disadvantages.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Senator Gerry Horkan can ask a question if it has not been asked already and I ask him to do so quickly. I say the same to Senator Paddy Burke and Deputy Pearse Doherty. I will take their questions together.

Gerry Horkan (Fianna Fail)
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There are a couple of small points which have not been covered. As a committee, we produced a reasoned opinion which we sent to the Commission before Christmas. Has the Commissioner read it?

Mr. Pierre Moscovici:

I have examined it, of course.

Gerry Horkan (Fianna Fail)
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I think six member states have issued reasoned opinions. What is the Commissioner's response to our reasoned opinion? There are a lot of concerns. While the Commissioner is saying it is a proposal and that we have engaged, co-operated and participated in country-by-country reporting, we have enormous concerns, as Senator Kieran O'Donnell and others outlined, about sales which do not take place in Ireland. There is a sales tax right across Europe called VAT or something similar. Corporation tax is usually based on where production takes place. If production takes place in Ireland, the tax on the profits belongs to Ireland. If production takes place in Germany or Singapore, the profits should be chargeable to tax there. It is now being moved and the weighting of one third, one third and one third is very arbitrary. It also excludes non-fixed assets. Therefore, a lot of the assets of most companies will be discounted in the calculation.

At our hearings in advance of coming to our reasoned opinion we asked academics and tax practitioners if this was a power and a tax-take grab by large countries from small ones and they said it was. I do not doubt that the statistics indicate that the European Union economy as a whole will grow, but in the absence of any analysis - the Commissioner has alluded to the fact that there is none - every member of the committee finds it hard to believe we will do better if all of the tax that used to be paid will move away, if the base is narrowed and the two other rates fall.

Paddy Burke (Fine Gael)
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I welcome the Commissioner and his staff. He says that when the CCCTB system is in operation, there will be a growth rate of 1.2% and extra investment of €90 billion across Europe. Does that include the United Kingdom?

Mr. Pierre Moscovici:

Of course.

Paddy Burke (Fine Gael)
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How much lower will it be when one takes out the United Kingdom?

Mr. Pierre Moscovici:

We do not have that calculation.

Paddy Burke (Fine Gael)
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If the Commission does not know, how can it include the United Kingdom?

Mr. Pierre Moscovici:

Because it is a member state of the European Union.

Paddy Burke (Fine Gael)
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Of course, it is, but the Commissioner is not saying how much will be generated by it. It is a global figure. It is fictitious.

Mr. Moscovici makes a strong case for a single tax rate across the EU and argues that it would be much simpler and easier to operate. Is it correct to say that if it was simplified, there would be a wholesale loss of accountancy and legal jobs?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We will go back to that question.

Pearse Doherty (Donegal, Sinn Fein)
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I have two questions. The first concerns a question the Commissioner answered earlier about the three rates of tax we would apply to multinational companies that would come under the current proposal. How can the Commissioner say this is not an issue of sovereignty when the proposal requires us to get rid of two of our existing tax rates that have been here for decades?

The second question follows on from other questions concerning the customs union and Brexit. Deputy Michael McGrath spoke about the lacuna between a negotiation. This morning, the Minister for Finance said that we could be looking at six years between Brexit and a new trade deal. We heard scary figures about the WTO tariffs, for example, that a rate of 50% could be applied to food and beverages. A total of 65% of our exports go to Great Britain and Northern Ireland. Is there any scenario whereby a country that wants to independently carry out trade deals with other jurisdictions would have customs imposed between its border and another member of the EU? I come from Donegal. On the way down here, I stopped off in Tyrone, which is in Northern Ireland, to buy a present for my son. Those are the kind of questions people are asking. His birthday is coming up at the weekend. They are asking what is going to happen in two years' time. They are asking whether they will be stopped at the Border and will have to pay a tariff if there are to be checks. It is very clear what the British want to do. They want to be able to carry out trade deals with other jurisdictions across the globe independently of Europe. Is there any scenario whereby they can still be part of the customs union with no tariffs?

Mr. Pierre Moscovici:

At the end of this meeting, I can understand that members have some reservations about the CCTB. With all due respect for members, I would call for a cool and good-faith dialogue in the time to come.

Kieran O'Donnell (Fine Gael)
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The Commissioner is toying with us.

Mr. Pierre Moscovici:

The only thing I ask for Ireland-----

Mr. Pierre Moscovici:

It is not finished. I cannot accept that. We have made proposals that are with the Council. We have received the committee's reasoned opinion. This was the occasion to discuss that first and we, of course, will deliver a written response. The real response will arise in the negotiations. The only thing I would like to try to obtain here is that there would be a discussion. Ireland cannot say "c'est fini" and that this does not exist. I would like the occasion to demonstrate that this proposal is a good one for the EU and Ireland. In the negotiations, we can discuss even the apportionment formula. The Commission will not stand in the way of a compromise. We are ready to discuss any proposal from the Irish Government. The only thing that would not be reasonable would be to say that Ireland has an opinion and does not even consider negotiating and examining the rest of the discussion. That is the only thing I ask of the committee.

The single tax rate would be in one country but the level would be decided by each member state. We have had debates about three rates and one rate and we can include that in the discussion but let us not caricature our proposal. If you put forward too many arguments without even considering those which are positive, the discussion is not fair and it is very difficult to move forward.

I repeat that we are very conscious of the specific case of Northern Ireland but, again, we are not anticipating and jumping to conclusions about a negotiation that has not yet started but we will have to negotiate.

Our chief negotiator, Mr. Michel Barnier, will directly, under the supervision, responsibility and control of the President, negotiate in the interests of the 27 members, taking into account each of their specific situations. We are all very well aware of the specific situation of Northern Ireland. We will do everything in order to preserve it and the peace agreement, as I said in my opening remarks.

Pearse Doherty (Donegal, Sinn Fein)
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I was not asking about the peace agreement. I was asking if it was currently possible for a country to negotiate international trade agreements without having customs between it and another European state.

Mr. Pierre Moscovici:

Frankly speaking, we have no precedent.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank the Deputy.

Mr. Pierre Moscovici:

I read Ireland's Eurobarometer. I know that I am here in one of the countries, maybe the country, which is the most pro-European. I would urge Ireland to believe more in Europe and to believe more in its capacity to influence Europe. It must not consider that, due to the upcoming Brexit, it is a kind of third country, which needs to negotiate separately. Ireland's interests will not only be on board but be at the core, at the centre. Let us try to be confident in one another. The European Commission is there to protect and defend Ireland's interests. Of course we will do the best we can but, not only that, we are going to succeed I am sure.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can I take the Commissioner up on the point that he is in a country which is pro-European? Yes, I am pro-European, but what kind of a Europe am I supportive of? That is the question that I now ask. Many people in Ireland ask the same question because of what happened to us with the collapse of the banking system and because of the way that the country and the Government of that time were treated by the European Union. In my opinion we did not get support from Europe. It has placed quite a number of question marks in the minds of the citizens of Ireland.

Europe has been attacking our corporate taxation structure or questioning that structure for many years and, in my opinion, the Commission is again not listening to Ireland. Perhaps it is that fact, that it does not listen, that may very well have been the cause of Brexit. Have we learned nothing from Britain now wanting to leave the European Union? It is clear from the considered opinions that the Commission has received from a number of member states that they do not want, or are sceptical of, the proposals being put forward.

There is a tax war going on. That tax war, in terms of Ireland's position, is because other European countries envy the structure we have here and how we deal with the companies that come and settle here. This not about people not paying their fair share of tax. This is about Ireland as a small country, competing in a Europe that seems to be centred on the big member states and is failing to understand the smaller member states; this is my view as a pro-European. I think that it would be far better to address issues affecting the quality of the lives of the citizens of this country and of other member states rather than embark upon a mission, which it was clear to me from the very beginning, is flawed. Other member states, having given their considered opinion, hold the same view. It is at a time after Brexit, and after Trump, that we need to be building a European Union that effectively reflects the views of its people and does what every government should do, that is, protect the people it represents.

To my mind, this proposal does not do that. If anything, it crystallises for me the unlistening ear of Europe and the misunderstanding that exists around taxation, and the impact that this proposal would have on our country. While Mr. Moscovici will robustly defend the Commission's proposal, it is up to Ireland and other states who feel likewise to robustly defend their position. The starting base should be one of understanding.

Mr. Pierre Moscovici:

Can I have a word?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It is a two-way street, Commissioner.

Mr. Pierre Moscovici:

I was not involved in decision making at the start of the financial crisis and I know how hard it was for Ireland.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That does not exempt Europe.

Mr. Pierre Moscovici:

No, but I am in charge now, and I am a member of the Economic and Financial Affairs Council, ECOFIN, since 2012. Ireland can be proud how, with the solidarity of its partners, it emerged from the crisis stronger and as a champion of growth in Europe. We all, collectively, must learn lessons from what was done at that time, what has been successful and what did not work. The Stability and Growth Pact did not exist, as such, in 2008, and during the crisis we invented the tools to respond to that. Today I am confident that we have a much stronger capacity to respond to that.

I can only repeat that no one ever contested the corporate tax system, and no one can. I personally, as Commissioner for tax, do not contest it because tax sovereignty is a principle, and the means exists in the treaties, in addition to the unanimity rule, to have full control of that. It would not make sense for a Commissioner to attack that.

The Chairman asks us to listen to parliaments and to be fully conscious of their sovereignty. I am not sure I have succeeded today from listening to all of your, shall we say, special spirit or fighting spirit, but I would like you to also listen to the Commission. The only thing I would like us to do together is to take the proposal on the table as a proposal, and examine it with good faith. This committee should look for positives. We will listen to your preoccupations, worries and proposals. In the end, we will try to build a compromise, because there is no Europe without compromise. I am French. I have been in Ireland many times. I have been a Minister for seven years. I campaigned here in the 1990s for Europe, as European affairs Minister, a long time ago. I know how European this country is. However, I do not believe in a Europe which would set big and small member states in opposition. I always refused that kind of position. We need to find compromise. I am very comfortable with that because in tax matters there are no big and small member states. One member state, whether it is big or small, can block a proposal if it wishes. Again, this proposal will not exist against you or without you. My last call is for us to continue to talk. Let us examine the proposal and try to make it better, so that in the end it can be seen that it is a good proposal for Ireland and for Europe.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I will not dwell on this but I have to say to the Commissioner that the first obligation of any government is to keep its people safe. The same would apply to Europe. The Commissioner complimented Ireland on the work it did during the crash and that now we are getting back into a better position. I would say to the Commissioner that the people of this country are not getting back into a better position. They are slowly rebuilding a life that has been devastated by what happened in Europe and when Europe was needed more than at any other time, it was not there for us. It is, in a way, Ireland versus the world, which was the title of the Commissioner's discussion this morning. The Commissioner said that Ireland did not always play fair but I think it did.

Mr. Pierre Moscovici:

I never said that.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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You said-----

Mr. Pierre Moscovici:

No.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I picked you up wrong then.

Mr. Pierre Moscovici:

I said that there were considerable improvements in the tax legislation in Ireland, and I paid tribute to it. That is exactly the contrary.

Kieran O'Donnell (Fine Gael)
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Before the Commissioner said something.

Mr. Pierre Moscovici:

Sorry?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I think the Commissioner said something similar, but anyway, we can check the text afterwards.

Mr. Pierre Moscovici:

I talked about state aids.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes.

Mr. Pierre Moscovici:

Yes. I think that our decisions are-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is what-----

Mr. Pierre Moscovici:

I think that our decisions are legitimate. The courts-----

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is what the Commissioner said and can I say it to him-----

Mr. Pierre Moscovici:

The Chairman is a Member of Parliament, I am a Commissioner and the courts will decide on that.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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A very senior politician in France, the Commissioner's own country, constantly referred to our tax base. I will say to the Commissioner again, despite the opposition there appears to be to this matter, there are far more important things to focus on in Europe. We can have a conversation about it, but I would like to see those issues being addressed with the ordinary people, our citizens who we represent, at the centre of all that. I think that we have had a reasonable exchange, and I thank the Commissioner and his colleagues for their attendance.