Colm Keaveney (Galway East, Labour)

I am glad to speak in support of amendment No. 2. As with previous speakers, I beg the indulgence of the Chair in making reference to the good people of Galway East who took the opportunity to make history prior to the commencement of the 31st Dáil by electing the first Labour Party Deputy in the constituency in the history of the State. It is a great honour to represent hard working people who have great concerns on the issue being discussed in the motion.

I am from Tuam in east Galway, which is highly dependent on employment as a consequence of the foreign direct investment which has greatly benefited the western seaboard. It is important for me to make reference to research from the Western Development Commission that clearly identifies a greater dependency in my constituency on the industrial groupings which benefit from the corporation tax of 12.5%. These include employers such as Medtronic and Boston Scientific which are situated approximately 20 miles from my home town and have a combined employment in the order of 5,000 - 6,000. That is significant.

It is in that spirit we support the amendment. We state clearly the Government's position on the corporation tax is to be unambiguous - it is not at risk. The new programme for Government clearly states the Government will keep the corporation tax at 12.5%. That commitment is protected in an EU context by the principles of unanimity on taxation matters. Although taxation will play its part in restoring the balance of our public finances our corporation tax will remain unchanged.

Ireland is small open economy with a heavy concentration of foreign direct investment and the 12.5% corporation tax is critical to supporting our economic recovery and employment growth. This tax rate is one of the cornerstones in the new programme for Government that will lay the foundation for our recovery. It is a key element for international investors when they look at this country and we must maintain the strong international signal that the 12.5% rate is not up for grabs. That sort of confidence about recovery is clearly inbuilt into the new programme for Government.

As a Government, however, we are aware that for some time the Commission has had an intention to bring forward proposals with regard to the common consolidated corporate tax base, CCCTB. The Commission has the right to initiate proposals and introduce legislative proposals with regard to the CCCTB. This is not unique and has been flagged. The publication of the draft directive is only the beginning of a very long process in that regard. The question of harmonising company taxation in the European Union has been around for a number of decades and we can anticipate that many more years will pass before any final proposals will fall for consideration by the Irish people and by this House.

Ireland is not opposed to any greater co-operation within the European Union on tax policy matters but we favour focusing on targeted solutions to ensure that identified barriers to working to the internal market are addressed. The economic impact assessment undertaken on behalf of the Department of Finance clearly alerted this Government with regard to the situation and the concerns we share about the CCCTB. It points out that a reduction in overall economic activity within the European Union and any change in that regard are factors of which we would be most cognisant. In the context of the 12.5% rate I reiterate the Government's position, namely, we will keep our corporate tax as clearly stated in the new programme for Government.

Ireland joined the European Union in 1973. In the 37 years since that understanding our economy has grown by almost 350%, which equates to an annual average growth of 4.5%. It is very much in our interest to protect the very framework that attracts foreign direct investment into this country. We are not in the business of creating, undermining or putting at risk a significant selling point for this Government with regard to attracting foreign direct investment. I noted that the people of Galway, in particular east Galway, can clearly identify with the strengths foreign direct investment has brought to the fabric of rural society. I am confident about the strong programme for Government which sends out very strong signals that this country has reopened for business. The one item which is not open for discussion is the 12.5% tax rate.

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