Dara Calleary (Mayo, Fianna Fail)

I thank Deputy Breen for his good wishes and for raising this topic. This is an important issue and, consequently, it is being closely monitored and acted upon by the Government on an ongoing basis. However, I would encourage all to take a measured view of yesterday's developments. While the Government is treating the matter seriously, this is not simply an issue for Ireland. This is about how the US tax regime for US companies works globally rather than posing some imminent threat to Ireland.

The Government will make certain the mutual interests of Ireland and the US are highlighted during consideration of this issue by the US Administration and Congress on an ongoing basis. I agree with the Deputy regarding the importance of US foreign direct investment in Ireland. US business is the largest component of our overseas investment with more than 500 US companies operating out of Ireland which have invested over €55 billion. While detailed and final provisions are yet to emerge, the US President, Mr. Obama's proposals are likely to have some impact on this activity.

Ireland is, however, recognised as one of the best locations in the world for foreign investment for a wide variety of reasons. The level of foreign direct investment in Ireland, relative to the size of its economy, is one of the highest in the world. US and other international investors choose Ireland for several reasons - efficient access to EU and near-markets; skills mix; English and other language skills; and financial consideration, of which the corporate tax rate is one element.

The US Administration has announced part of its plan to reform its international tax laws and improve enforcement. First, reforms have been proposed to ensure the US tax code does not, in its view, unduly incentivise job creation outside the US. Second, the US Administration seeks to reduce the amount of US taxes lost to so-called tax havens, either through unintended loopholes or through illegal activity. There is an important distinction between action against tax havens and proposed changes to the broader US international tax system. Ireland is not considered a tax haven by the US and proposals in this area should not be any threat to our interests.

Deputy Breen called for a co-ordinated strategy to lobby the US Government and focused effort to protect jobs in Ireland. Both are already in place. The Government has been monitoring and expecting the recent developments. The issue was raised with the US Administration by the Taoiseach, the Minister for Foreign Affairs and the Tánaiste and Minister for Enterprise, Trade and Employment, who met with the US Treasury Secretary, Mr. Timothy Geithner, on recent visits to the US.

A monitoring system on developments in the US international tax code has been in place for several years. In addition, a contact group, comprising senior officials from the Departments of Enterprise, Trade and Employment, Finance and Foreign Affairs, IDA Ireland and the Revenue Commissioners, has been meeting regularly on US tax policy issues for the past six months and will continue to monitor developments closely.

Now that the US Administration has announced its initial proposals, we will continue to engage with it and with Congress as this issue develops. To this end, IDA Ireland has deployed a senior executive to the Irish Embassy in Washington as a point person to monitor and engage with this issue.

Regarding job creation and protection, we must continue to invest in our people to ensure we have the skills and knowledge to support the vision set out in the programme for sustainable economic renewal. We will support those who have lost jobs due to the economic downturn and provide them with opportunities to re-enter the workplace. More than €1 billion of the Department's budget for 2009 is targeted at labour force measures, including activation and training programmes for the unemployed, upskilling for those in employment and employment programmes. In addition to these major programmes, the Cabinet committee on economic recovery has been working across the Government to deliver the best support and results for enterprises. We are also supporting enterprises through other measures, such the new enterprise stabilisation fund with its budget of €100 million.

The US proposals must now go to Congress for intense and lengthy debate. Assessing the impact of the proposed changes on present and future levels of direct investment by US companies in Ireland is dependent on more detail and we should be conscious that nothing has been enacted thus far. The proposals have potentially wide-ranging effects for US companies as well as for destinations of US investment worldwide, including Ireland. Consequently, they have not been universally welcomed in the US. In addition, the US Government has clearly signalled that it is conscious of the need to maintain the competitiveness of US companies operating globally. The Government will make sure that the mutual interests of Ireland and the US contribute to consideration of this issue by the US Government and Congress on an ongoing basis.

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