Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I thank the witnesses from the ESRI and Dr. Collins. I warmly welcome and support pretty much everything they said. I have long advocated for some of the things for which the witnesses are advocating. Tax expenditures are a shadow budget. They constitute a pretty vast realm of public money that is being spent every year and is not scrutinised in any serious way. For much of the time, we do not know what we are getting for it and whether it is beneficial spending. Deputy Durkan is right to be concerned about pensioners. A total of €2.7 billion is going on pension tax reliefs. Is it better that we have this hidden subsidy for pensioners, which I argue and I think our contributors have argued overwhelmingly benefits some of the wealthiest earners and pensioners, or would it better to stop those reliefs and double the State pension? That is putting it in a slightly extreme form but I broadly favour that. If we double the State pension, we would do a lot more to address pensioner poverty and would also have a much clearer view of the money that is being spent on pensioners and who it is benefiting. It would overwhelmingly benefit the vast majority of pensioners as opposed to a tax relief system of subsidising pensions that tends to benefit the highest earners and the best-off pensioners. I would be interested in hearing the views of the witnesses but this is implicit in what they have said. This is the debate. I do not know who said at a previous meeting of this committee that dealt with this issue that, broadly speaking, direct expenditures as against tax relief-type expenditure tend to be more effective in delivering results in terms of providing particular services or for particular needs in society.

I have a particular interest in film tax relief, which amounts to €70 million to €80 million in tax relief. Do any of the witnesses have an opinion on this? This is an odd tax relief because they get cash upfront. Most of the people who get this corporate tax relief have never made a profit. In fact, the way it is designed means that it is in the interests of the producers who get it to never make a profit. It is a fascinating area. I am also very curious. We are told that the beneficiaries of the corporate tax credit are getting between €10 million and €30 million. I do not understand how we cannot know whether they are getting €10 million or €30 million. It is pretty bizarre. What is it achieving for us? A tax relief of this sort is about trying to build up a film industry on scale and create good employment. In fact, the film tax relief is specifically linked in the legislation to creating quality employment and training but there is no checking of whether this is being delivered. Almost nobody has a job in the film industry. A tiny number of people - possibly 100 - have jobs.

They are like the dockers back at the beginning of the 19th century in that they are turning up and hoping they might be employed on a particular project. It is a 19th-century Dickensian situation, yet we are paying out €70 million or €80 million in this context. I would like to hear what our contributors have to say regarding this issue. My perspective is we should be studying this situation and asking if that money would be better used by being paid out to create a film industry via direct expenditure instead of by means of a tax relief afforded to a group of film producers. We should evaluate that possibility.

I welcome the suggestion that the Irish Government Economic and Evaluation Service, IGEES, create a tax expenditure section to evaluate this aspect. That service has done some good work in evaluating the relative merits of money being paid out through the housing assistance payment, HAP, and rental accommodation scheme, RAS, programmes compared with money going directly into investment in public housing. The conclusions in that regard speak for themselves. IGEES evaluated that expenditure and concluded that it would be far better for us to build our own public housing than to continue with these expenditures. I have long thought we should have an evaluation of what I see as a shadow budget and proper scrutiny of that spending. I agree strongly with the recommendations in that regard.

I would like our contributors to comment on another point. They have not focused a great deal in their submission on corporation tax expenditures. To what extent are those expenditures included in the figure of €15 billion concerning tax expenditures? The witnesses are separating out structural expenditures, as they call them, or part of the base, from discretionary expenditures. How do corporation tax expenditures fit into that context? In broad terms, pre-tax, the gross profits of corporations are running at about €180 billion. Those profits have doubled over the past ten years, but only €90 billion of them, roughly half the total figure, is subject to tax. The taxable profits of corporations are halved by tax reliefs.

How much money, then, is going abegging in that regard? The effective rate of corporation tax works out at 5% rather than 12.5% if we base this calculation on gross pre-tax profits. If the minimum effective corporation tax rate were 12.5% instead, then €7 billion to €9 billion more in tax could be collected. I am interested in hearing witnesses' thoughts on that area. The implication being suggested regarding income tax seems to be there should be a minimum effective income tax rate because the system we have is not capturing some of the reliefs benefiting higher earners. Do the witnesses hold the same view regarding corporation tax and a similar need for a minimum effective corporation tax rate?