Dr. Micheál Collins:

We are both enthusiastic to address this issue. I will come in briefly. I thank the Deputy for his questions. Yes, the phrase “shadow budget” is a good one and it is worth thinking about these issues in that context. These decisions that are announced concern tax we deem we should not collect. It is not as easy to see and identify those potential tax revenues because they are not coming in, but it is revenue the State could potentially collect. It fits well within the context of the remit of a Committee on Budgetary Oversight like this one. Therefore, I reiterate how welcome and important it is the committee has retained a focus on this issue. It is very useful.

The questions being asked by Deputies Boyd Barrett, Durkan and others raise the expectation the Revenue Commissioners, the Department of Finance and others will provide the information that can make discussions in this regard considerably more informed than they have been previously. At least with income taxes, it is necessary to have such taxes available and paid to offset some of the reliefs in place. In and of themselves, therefore, they are skewed up the income distribution and availed of by individuals who are relatively higher earners in society.

The point made by the Deputy regarding direct expenditure is important. The reality is if we were spending the same amount of resources in the form of direct expenditure, such expenditure would get considerably greater oversight from this committee.

I do not mean to underplay the excellent work the committee is doing but it would simply be more visible in the budgetary documentation and the public expenditure plans from the Department of Public Expenditure and Reform and elsewhere. It is the visibility of these measures that makes it very difficult for them to be thoroughly understood and for the very difficult questions around them to be asked and answered. Therefore, the more information on them, the better. The film relief is a good example of that. A number of people would be very strongly in favour of the film relief and others would argue the other side. It would be good to have the information available on how the resources are being used, to whom they are flowing and the alternative use of those same resources because ultimately the State is expending here. It could expend directly by spending the money in a particular Department, and the committee could hear from representatives of the Department in question on that, or it could do it through the tax system by deciding not to collect particular resources. That throws up opportunity cost questions about what else could happen and how else those resources could be used. The more information we have on that, the better.

On the corporate tax issue, there is an interesting contrast whereby we have a minimum effective tax rate for high earners but have resisted that for a long time for corporates, although that is now changing quite dramatically. Looking at the structure of tax expenditure, the area that is hardest to understand and where it is hardest to know what is going on is capital allowances. These are the allowances that companies, be they enormous or small, can use to offset assets and write down their tax bills. I have no doubt that within that there is a mixture of legitimate activity and activity about which we could ask questions. In the tax expenditure world, that is a very big black hole and it is deserving of attention.