John Deasy (Waterford, Fine Gael)

Last night in this House, a Member, in regard to the corporation tax rate, referred to Ireland as "a semi-fraudulent tax haven for major international companies dodging paying their legitimate taxes in their own countries". It reminded me of former Deputy Joe Higgins, the socialist MEP, who said on Waterford local radio some weeks ago that he advocated doubling the corporation tax rate of 12.5%. As I said at the time, the effect would be that multinational companies like GSK and Genzyme in Waterford would not be long in re-evaluating their position in Ireland. A couple of recent comments from executives caught my attention, including one from Hewlett Packard which suggested that if the tax rate increased, it would be re-looking at its investment in Ireland, and, in regard to Pfizer, it was reported "Giant US multinationals may stop investing in Ireland or pull out completely if our 12.5 per cent corporation tax rate is hiked as part of the bailout".

It is worth repeating a few statistics. For the first 11 months of 2010, there was a surplus of €589 million in corporation tax. In November alone, companies paid more than €1 billion in tax, which was one fifth of our total tax take, effectively making up for the drop in income tax. These companies employ 240,000 people, account for 70% of Ireland's export market and are probably the most important ingredient in any export-led economic recovery. We know all this, as it has been repeated before.

Perhaps some of the left-leaning politicians will explain how we will pay social welfare if these multinationals leave this country.

It is fair to say our corporation tax rate is not the only reason multinationals are in Ireland. Some believe our rate is the lowest in the world but it is not. There are many reasons multinationals come here. It is not wise to become fixated on this element alone. An executive from a major pharmaceutical company was in my office yesterday and he talked about the standards in science and in schools and about corporation tax. He talked about standards in universities and State aid for research and development, etc. However, there is a growing body of opinion in this country to the effect that we have become slightly complacent about our corporation tax rate and almost fixated upon it as if it were the only relevant issue. While doing this, other countries are thinking about it and acting to make their own tax codes more competitive and, more important, more attractive than our own.

An example concerns a Labour Party idea adopted by the Conservatives recently, which in itself says something. It was announced that corporation tax in the United Kingdom will be reduced from 28% to 24% over the next four years. What caught my eye was the patent box concept. By April 2013, a tax rate of only 10% will be applicable to profits from patents in the United Kingdom. This will be very attractive to the pharmaceuticals industry.

In Britain, HM Treasury spokespeople are talking about making the UK tax code far more competitive. Should we be concerned about the UK plans with regard to patents? Our four year plan considers closing down income tax shelters from patent earnings. This recommendation was made by the Committee on Taxation. There is now a debate taking place on whether steps have been taken recently that would compensate for that.

Let me quote a pharmaceutical executive on the UK patent box tax rate of 10%, which he believes has the potential to transform the way Britain is viewed by investors:

For too long, while great inventions and discoveries have been made in this country, downstream economic activity in development and manufacturing, and associated employment, have been attracted to other countries that had more favourable corporation tax regimes. In one stroke, the introduction of the UK patent box will help to change this dynamic [completely].

This is relevant for me because the same company has announced it is investing £500 million sterling in the United Kingdom due to the announcement of the patent box reforms. This company employs 800 people in my constituency.

While we have been concentrating on the corporation tax rate, our competitors have moved on and are thinking ahead. They are being innovative. It is on innovation that we need to focus. We need more innovation in our tax code so as to attract more investment. We must not become fixated on what we have.

The hard left is getting a little giddy about the electoral gains it might make in the next election. It sees the collapse of Fianna Fáil as its ticket to the socialist republic. I have one thing in common with the Member who said in the House last night that Ireland is a "semi-fraudulent tax haven for major international companies dodging paying their legitimate taxes in their own countries". This morning Citibank announced 250 jobs for my constituency and in the constituency of the Member in question. Jobs, rather than a failed ideology, are all that matter and that are of importance. It is a question of jobs and enterprise, not about socialism.

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