Terence Flanagan (Dublin North East, Fine Gael)

I congratulate the Minister of State, Deputy Seán Sherlock, on his elevation to the ministerial ranks and wish him well for the many challenges that lie ahead. I am delighted to support the motion, which explicitly states our commitment to the 12.5% rate of corporation tax and our desire that it continue. It is correct to state that this low rate of corporation tax has been one of the key ingredients of our country's growth and prosperity in the past ten years. I want to put on record that it was Fine Gael and the Labour Party which in the early 1990s introduced the 12.5% rate and it is the priority of the new Government that this low rate continues for the foreseeable future.

Unfortunately, our economy is almost bankrupt. The ship has hit the rocks and we are reliant on outside help from both the EU and IMF to try to get the situation back on track. It was Fianna Fáil's mismanagement of the economy and its economic recklessness that almost bankrupted the country. The massive bank bailouts provided have made it inevitable that the Irish people will have to pay taxes as contained in the four year plan published by the last Government, which puts a straitjacket on the new Government that has just come into office.

The notion put forward by the previous Government, namely, that bailing out reckless banks and investors was necessary to protect Ireland's credit rating, has proved to be a catastrophic misjudgment. The previous Government's policy of writing blank cheques for banks has destroyed the country's creditworthiness, which was shown clearly with our recent withdrawal from the various bond auctions. If it were not for the massive amount of money that must go into the Irish banks at present, the financial problems of the country might be manageable.

We are in a situation where we must renegotiate the interest rate charged on the moneys from both the EU and IMF because, if we do not, this country is facing the abyss. However, the fact we are seeking to renegotiate our interest rate has brought the issue of our low corporation tax to the fore. The last thing the country needs at this time, given massive unemployment, is for some of the 1,000 multinationals to leave these shores or stop investing in Ireland. We are clearly reliant on foreign direct investment. The multinationals make a huge contribution and employ thousands of workers. The motion before the House must be supported by all sides because it is critical for the survival of thousands of jobs that our low tax rate remains as it is. The message that should leave the Chamber today is that the issue of low corporation tax is one which is above politics, that the Members of Dáil Éireann are united in regard to retaining it and that we will not give in to outside interference from other countries.

The IDA has hundreds of staff worldwide working to sell Ireland on the basis of our low corporation tax rate, which has been a major selling point. To raise the rate will not work towards our continuing to attract large multinationals to this country. The corporation tax rate is the envy of Europe, particularly when compared to that of countries like Germany, where the rate is 30%, the United States, where it is 39%, the UK, where it is 28%, and China, where it is 25%. While I accept the effective tax rates are lower in some countries than our effective tax rate, overall, it has been a winning formula for Ireland and we need that to continue.

In this regard, I fully support the recent statement by the Taoiseach, Deputy Enda Kenny, that change in our corporation tax rate is non-negotiable. In fact, the programme for Government states explicitly that the Government will keep the corporation tax rate at 12.5%. It was in the context of the Lisbon treaty that a legal guarantee was given that our rate would remain as it is. It is not acceptable for larger states such as Germany and France to interfere or for there to be political posturing by Chancellor Merkel and President Sarkozy in order to bully the Irish people into changing the tax rate. Europe should be indebted to the Irish people for endorsing the European project and ensuring the Lisbon treaty went through.

What needs to happen is that Ireland and the other small nations would form an alliance to ensure our rate continues. My party was totally opposed to the EU being given control of corporate tax rates. It was Commissioner Olli Rehn who said last November that the Commission will not put pressure on any country on this matter and that the rates of taxation are a matter for each sovereign Government. Let us hope this continues. I support the motion and hope all Members will do so.

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