Kieran O'Donnell (Limerick City, Fine Gael)

I am delighted to make a contribution to this debate and in the short time available to me I want to make a number of important points. I wish the Taoiseach, Deputy Enda Kenny, well in the negotiations over the comings days but I want to deal with the issue of corporation tax. Europe should be aware that the low corporation tax has been a cornerstone of our economic platform since the 1950s across a range of areas. We had a 10% manufacturing rate. We now have a low rate of corporation tax. Furthermore, our corporation tax is twice as important to us as the tax is to Germany. Our tax as a percentage of gross domestic product is 2.9%, which is twice Germany's rate of 1.1% and ahead of France whose rate is 2.8%. That is an indication of the importance of our low rate of corporation tax in terms of generating tax in the Irish economy. We have a large number of multinational companies in Ireland. I am a Deputy for Limerick city which has a huge multinational base. Many of those companies would not have come to Europe if Ireland did not have a 12.5% rate of corporation tax. That is something that is overlooked. A rising tide should lift all boats.

We are a small, open economy. That is often overlooked. We are a vital partner in terms of Europe. One of the cornerstones of our small, open economy is our low corporation tax rate. Figures do not lie. The fact our corporation tax in percentage terms equates to 2.9% of our GDP - it is 1.1% in Germany - shows the benefit of the tax in terms of bringing industry and jobs to Ireland. We have a lower corporation tax rate than France. Our European partners must be aware that the low corporation tax has been a driver in terms of our small, open economy. We have a large number of multinationals coming here and we cannot ignore that.

I want to make two other points in the time available. In the overall context of the negotiations, Europe must see that in terms of the 5.8% interest rate and the fact that we are being charged a 3% margin over and above the cost of money to the fund itself, that rate is not sustainable. Europe is aware of that. I expect there will be a lowering of the rate but it must be to a rate that is sustainable.

In terms of the European Central Bank, our Minister for Finance has already had discussions with Jean-Claude Trichet on giving the banks a proper period of time to re-establish independent funding as distinct from ECB funding of €150 billion. We do not want a situation where the banks are involved in a fire sale of assets effectively to reduce their deposit to loan ratios.

When the bank guarantee scheme was introduced in September 2008, the then Minister for Finance, Deputy Brian Lenihan, stated it was to ensure credit would flow from the banks to the small and medium-sized business sector. That has not happened. I am aware from my previous role as an accountant in practice and the number of people who come to see us in our constituency offices that people cannot get credit from the banks. The banks are now actively looking to reduce their loan portfolio and I believe they are making decisions that may not make commercial sense both from the point of view of the bank and the economy in terms of keeping people in jobs and in business.

The stress testing being carried out on the Irish banks will be completed by the end of March. That must feed into the discussions with Europe. Europe is carrying out its own stress testing which it is expected will not be concluded until the summer. That, too, must feed into the discussions.

We have reached the point where our European partners must realise that countries are different. As a small, open economy over successive decades, a low rate of corporation tax has been to our benefit. That is measured in the tax take and the number of jobs across a range of sectors, especially in the multinational sector. If a company is paying 40% corporation tax, it means the company must give 40 cent from every euro of profit to the Exchequer. If that were reduced to 12.5%, the company could put the difference back into keeping people in jobs. What we must consider is a sustainable basis.

I wish the Taoiseach, Deputy Kenny, well in the negotiations. I have no doubt they will be successful, but they will be difficult. Europe must be aware that what is good for Ireland is also good for Europe.

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