Joan Burton (Dublin West, Labour)

Given Ireland is now engaged in this pretty awful process of having to be bailed out or dug out by at least three international organisations, the European Central Bank, the European Commission and the International Monetary Fund, together with a number of individual countries such as the United Kingdom and Sweden which have offered bilateral assistance to Ireland, it appears there is a list of conditionalities being prepared by many of these organisations. One of the conditionalities which has been suggested as being on the list is that in some way or other Ireland might be forced to give up the 12.5% rate of corporation tax levied on company profits in Ireland as though the fact we are getting a bailout means that this would be an appropriate payback in regard to something which has acted as a particular driver of investment in Ireland. The suggestion is this has been to the detriment of others in the member countries which are involved in assisting us in our difficulties with our banks. It is useful that we have a discussion on this issue, and I thank the members of Fine Gael who have moved this motion.

The issue of tax on company profits is not simply a matter of headline rates. Even if it were a matter of headline rates, the Irish rate is not so out of line as is sometimes suggested by people who might not have actually looked at the situation in detail. Headline rates are not the important issue, which is the effective rate of tax, including the treatment of dividends and also including the important issue, which does not get counted in corporation tax, of the level of subsidy which can be made available by countries trying to attract mobile international investment.

The other major issue in regard to Ireland and other countries is that of write-downs, particularly for depreciation on plant, machinery and buildings, and also, nowadays, of research and development or in regard to work that involves the creation of patents and patent rights and entitlements. What is interesting is that in terms of the OECD statistics, the corporation tax revenue to GDP ratio in Ireland in 2006 was 3.8 and in the EU-15 was 3.4. The figure for Ireland was 3.5 in 2001 and 3.4 for the rest of the EU-15 in the same year, and for Ireland it is 2.7 this year. Therefore, the suggestion that Ireland is way out of line is not necessarily correct.

When one considers the treatment of depreciation in regard to writing down buildings, plant and machinery and so on, Ireland is at the more conservative end of the depreciation range. Ironically, countries such as Denmark, Sweden and Belgium grant far more generous terms according to the OECD information on write-downs in regard to depreciation. It would helpful, although difficult to achieve, if we had an accurate picture of what the effective tax rates, dividend treatment, write-downs such as depreciation and write-downs of investment in research and development are in all the different countries because I suspect the real picture is a little different.

Some are very critical of the low Irish corporation tax rate. The Minister of State, Deputy Mansergh, has just pointed out that the Irish treatment of corporation tax as an attractor and generator of foreign direct investment goes back to the late Deputy Gerard Sweetman in the Fine Gael Government of that time, if I remember correctly.

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