Brian Lenihan Jnr (Dublin West, Fianna Fail)

As Deputy Doherty knows, a service is available in the Department and I am not aware of a request made for the service. My information is that 40% of the requests for the use of this service on costings has come from Deputy Doherty's party and these requests have been facilitated through the Department. There is no difficulty with the Department providing costings and this is important. It should be also put on the record of the House - not specifically with regard to Deputy Doherty but with regard to the House generally - that the Oireachtas is funded from the central fund and has substantial access to moneys to conduct research on various topics. I accept that as with all economic research, the research done by the Department is most interesting to Deputies because it is the research which informs Government thinking and therefore gives a greater prospect of evaluation.

The precise proposal before us from Deputy Noonan is that we shall within one month of the commencement of the Act prepare and lay before the Dáil a report on reducing the effective tax rate applied to intellectual trading losses incurred by companies and examine the option of offsetting such losses against employers' PRSI. In dealing with the earlier Labour Party amendments, I made the point that I do not believe this is an appropriate time to put statutory obligations on the Department to engage in research on a wide range of subjects. The Department has had much work to do in the past two and half years and will have much work to do in the next nine months. I do not want to rehearse these arguments again. I put them on the record of the House this morning.

My one note of caution to Fine Gael about this amendment is that the precise subject it wants us to examine is the possible option of offsetting losses against employers' PRSI. Employers' PRSI is a very important revenue base for the State in making a contribution to the social insurance fund. I have been a very strong defender of our 12.5% corporation tax rate. It is a key feature of our general strategy to attract inward investment to Ireland in manufacturing and services. I and the Government sustained considerable criticism over our conduct in the EU IMF negotiations because we decided to hold out on this issue and not simply automatically enter negotiations. We ensured that we received satisfactory political assurances on the subject before we even embarked on a process of strict negotiation. This was a considerable diplomatic success at the time.

Our strategy is to have a 12.5% corporation tax rate. The suggestion that whatever funds can be received out of this 12.5% rate can be then further offset by an obligation not to pay employers' PRSI is very far reaching . We have introduced intellectual property reliefs which in effect reduce the residual corporation tax liability in the case of research and development enterprises. As Minister for Finance I introduced many of these incentives in successive Finance Bills. They fit in with the general strategy that not alone do we want to attract inward investment in trade, services and manufacturing but we also want it to have a high research and development content so that employment in these enterprises will go up the value chain. There is consistency in the tax reliefs we offer multinational companies establishing here. The basic 12.5% rate is at the heart of the attraction strategy and this is complemented by further inducements with regard to research and development to fit in with the character of what we want to attract.

When we state we will allow employers' PRSI to be offset against tax liability in effect we are stating the enterprises involved should not pay PRSI. This is what would be legislated for in practice. I do not believe we should legislate for this and I must state this. I believe these companies have to meet the minimum social requirement of contributing for social purposes to the funds which ensure the various contingent risks, whether during life or on retirement, are met by a reasonable payment from the State. If the demand is that these companies should be dispensed from these obligations, one is establishing a differentiation between these enterprises and domestic enterprises, smaller businesses and firms and occasional employers who will remain, and rightly so, under an obligation to pay PRSI. A contrast would be established between these smaller struggling businesses and larger multinational enterprises attracted here which would be dispensed with an obligation.

In fairness to fine Gael, I know it states this is only an option we should examine and I am not making a direct political criticism. However, I have heard the case reflected in the amendment made by some tax planners who speak on behalf of the international enterprises and I must state I have viewed the case with a degree of scepticism. There must be recognition that these companies have basic social obligations. If those social obligations do not exist in other jurisdictions and exist here then the issue is why they do not exist in other jurisdictions.

I do not want to go back to speaking about banking as we had our discussion earlier, but one of the key issues we will have to examine at European level is how various states can co-operate to ensure minimal standards are maintained, whether with regard to labour conditions and practices, tax practices or practices with regard to social insurance. The idea that multinationals can forum shop whereby certain countries acknowledge no social obligations and therefore one is put under pressure to dispense with one's own is not, in my view, acceptable. In general terms, I do not propose to accept the amendment because of the burden it would put on the Department.

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