Michael Kitt (Galway East, Fianna Fail)

Yes. I welcome the opportunity to contribute to the debate on this motion. Earlier, my party leader clearly affirmed our absolute commitment to the maintenance of our 12.5% rate of corporation tax. I welcome the fact that the programme for Government contains a commitment relating to the retention of this rate. Most parties agree that our rate of corporation tax is essential in the context of the country's economic recovery.

Chartered Accountants Ireland has pointed out that competition - including tax competition - is an essential component of the single market. There is also clear evidence that investment attracted to Ireland by our policy on corporation tax is largely won against non-European Union countries and is, therefore, a net benefit to the EU. I have seen evidence of this type of investment in Galway, where companies involved in the medicare-pharmaceutical industry have established very good track records. We cannot move away from the important employment created by these companies and thereby undermine a strong national recovery.

There are serious implications for the wider European economy. Ireland's corporation tax regime is undoubtedly under attack from other EU member states. These attacks are extremely unfair because Ireland collects a significant share of its taxes from companies. EU member states, particularly those in the eurozone, must retain their tax sovereignty as an important lever of fiscal control. The Irish corporation tax system compares well with the systems that obtain in other EU member states in the context of achieving actual and relative yields. The bottom line is that global recession has robbed all European countries of tax revenues from all sources.

In view of the fact that expenditure has curtailed, there is an urgency in the context of raising taxes. We have been informed that there are firm proposals regarding the establishment of a common consolidated corporate tax base, CCCTB. I am of the view that the CCCTB is unwieldy and irrelevant and that its time has passed. The conventions and treaties underpinning the European institutions do not permit the EU to legislate for any direct tax such as corporation tax without the unanimous agreement of all 27 member states. An important attribute of the VAT system is that member states are not obliged to ask each other's permission in order to vary their rates. The European VAT system is stated by way of EU directive. There is no comparable directive in respect of direct taxes such as income tax, corporation tax, capital gains tax, etc.

For many European member states, monetary policy has already passed to the European Central Bank, ECB. Individual, sovereign member state Governments must retain the capacity for some control. Taxation policy remains the key tool available for domestic economic regulation.

It is interesting that the proposals relating to this matter were put forward by the French and German leaders. The normal pattern is that EU proposals are put forward by the Commission. The introduction of a CCCTB could help to complicate matters. I understand that no member state can be forced to accept a CCCTB. As Deputy Martin stated, during the referendum campaign on the Lisbon treaty the European Commission made it clear that corporation tax would not come under threat.

Questions have been raised with regard to whether European multinationals will pay the same amount or a smaller amount of tax under a CCCTB. I suggest that this idea is no longer relevant because it would serve to distort the distribution of taxes within the European Union. What may have been relevant ten years ago, is no longer relevant in 2011.

There has been some discussion with regard to a new policy regime. The Minister for Finance dropped a number of hints in this regard. I would like to be provided with further details in respect of this matter. The discussions taking place at European level are extremely important. Mr. Jean-Claude Trichet has spoken a great deal with regard to what is right for the European economy. It is important to stress that the recoveries of the European economy and the Irish economy are interlinked. Clarification is required with regard to what is occurring at the discussions to which I refer. I hope this matter will be debated further when the Taoiseach returns from the forthcoming summit.

During the recent general election campaign, every candidate referred to job creation. We must take this opportunity to stress that we are concerned with regard to creating and retaining jobs and that we will not walk away from the policies that have led to jobs being created in the past. Why should we undermine employment in this country or the prospects for economic recovery? The increase in exports and the level of investment on the part of multinationals are both welcome and positive developments. The introduction of a new system would reduce the attractiveness of member states which currently have in place low-tax regimes and would lead to FDI being diverted to countries outside the EU.

During a radio interview earlier today, the former Taoiseach, Mr. John Bruton, provided a very good history of corporation tax. He made the point that corporation tax is not new but that it has been in place for many years and is something we all value. I hope corporation tax will remain the cornerstone of this country's industrial policy. Is it right that we should lose out to competitors outside the EU, particularly in the context of the medicare-pharmaceutical industry?

I support the motion tabled by the Fianna Fáil Party. I welcome the fact that there is all-party support for it. I hope we will obtain a good outcome from the summit the Taoiseach is due to attend later in the week.

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