Peter Mathews (Dublin South, Fine Gael)

I echo the substance of the speech by the Minister of State, Deputy Brian Hayes, and underpin and underscore how important is the maintenance of a 12.5% corporation tax for this country. I wish to make two points on this motion. There are two important thrusts our Government representatives, the Taoiseach and the Minister for Finance, must make in the coming days. The first concerns keeping the corporation tax rate at 12.5%.

Remarks made by President Sarkozy last week were misleading. In France, there is an effective corporation tax rate of 8.2% even though the country's headline rate is 34.4%. Therefore, it is disingenuous, almost bogus, misleading and unfair for the president of as large and powerful a nation as France to try to insist that Ireland should step back from its current status in regard to corporation tax. There are 11 countries in the European Union whose effective corporation tax are less than Ireland's. Our headline rate is 12.5%; our effective rate is 11.9%. The eleven countries with lower effective rates include Lithuania at 0%; Luxembourg at 4.1%; Bulgaria, 4.6%; Belgium, 4.8%; Latvia, 6.5%; the Slovak Republic, 7%; the Czech Republic, 7.4%; Estonia, 8%; France, 8.2%; Cyprus, 9.4%; and Romania, 10.4%.

It is clear from even that brief picture that a powerful country is trying to take advantage of Ireland in its current demise - as an economy suffering from enormous losses following the credit bubble and the bank sector collapse - and bustle it into a corner to open up the possibility in the eyes of countries such as France of revisiting that rate of tax which, as the Minister of State, Deputy Hayes, pointed out, is core and central to employment, economic recovery, production, distribution and export of goods and foreign direct investment. It is unEuropean of President Sarkozy to try to open this discussion in the way he has done. It is very important that the European Union's founding principles are not ignored. I strongly call on the president to withdraw any suggestions or requests for a revisit to or increase in Irish corporation tax.

I turn to the second most important aspect for our country and its recovery. In coming days our Taoiseach and the Minister for Finance and their supporting teams will visit Europe to present the true picture of the losses in our banking sector and the implications of the loans embedded in our banks which are repayable to the European Central Bank, and to our Central Bank as its proxy. It is vital that our negotiating team presents new faces, facts and figures based on proper measurement of the losses. In that regard we have been told we are waiting for stress test results. There are professional people in this country who a year and a half ago were able and should have been allowed to present the true scale of losses. Including mortgage loan losses in the banking sector, these will be in the order of €100 billion. That fact must be impressed on Messrs. Trichet and Rehn and Mr. Chopra from the IMF. Yesterday, Mr. Trichet was reported as having said that Ireland can bear the sort of burden implied in the €85 billion package. It could do so if it did not have the legacy bank debt of approximately €180 billion now within the sector.

Unless there is a reduction and restructuring of that debt in the banking system - a write-down with perhaps a debt for equity swap of elements of the bank debt as suggested by Professor Karl Whelan - we will have failed our people. We must revisit this matter. I give every encouragement to the Minister for Finance who last week had the courage and the timeliness to bring that matter to the attention of Europe when he stated there was a doubt about the sustainability of the debt. That was in his opening remarks which the Minister will bring forward to the next stage of discussion. I encourage and support him in bringing that fact forward.

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