Brian Lenihan Jnr (Dublin West, Fianna Fail)

This evening, we learned from Government sources that the question of an interest rate reduction will not arise in the discussions at the summit the Taoiseach will attend later this week. Plainly, the issue has been deferred to a later day. I understand there are important elections in Germany that make it difficult for Germany to agree or to be seen to agree any interest rate decrease for Ireland. Although such a rate decrease was on offer at the first summit the Taoiseach attended, some states attempted to attach conditions to it in terms of the CCCTB.

The issue is not about the rate, so I am disappointed that our side must divide the House on the motion. We fully support the Government in its exertions on this question in Europe, but the issue is about the CCCTB, not the rate of tax. In European terms the CCCTB is an attempt to generalise corporation tax arrangements in a way that would plainly put Ireland at a competitive disadvantage in attracting industry. The Government has wisely made a strong case about how our effective rate is at the average European level as opposed to below the average. The CCCTB is a dangerous proposal for Ireland. Once one starts relocating profits in other countries by law, the attractiveness of Ireland as an investment location is correspondingly reduced. This is why we must be careful.

Given that the interest rate issue will not be on the table during the coming days, I take it that the corporation tax issue will also be off the table. More will be heard about this matter in the days ahead, but it is clear that there has been a significant change in Government thinking on this matter since assuming office. In response to the private Members' motion tabled by my party, one that sent out a clear signal that Irish corporation tax policy was immovable and that we cannot participate in the CCCTB, the Government tabled an amendment that introduced language on being committed to "a constructive and forthright engagement with all of our European partners on this issue", not on tax issues generally. Press reports suggest that, at the previous summit, Mr. Herman Van Rompuy made an offer to the Taoiseach to the effect that, if we were prepared to be constructive and to engage on tax co-ordination generally, we would receive an interest rate decrease. This proposal could and might have been examined, as it related to tax generally. However, the terms of the amendment commit the House to entering into a constructive engagement on the CCCTB. This is what the Government is inviting us to do, but Fianna Fáil is not prepared to be a party to it. It is regrettable. Although we will support Government efforts in this area, it is far too early to make such a commitment.

I will give the Government cautionary advice. If it insists on going down this road, it should ensure that the CCCTB discussions are held among the 27 member states, not the eurozone member states. Where the latter are responsible for the facility and, therefore, the interest rate attaching to it, the 27 EU member states will need to decide the CCCTB issue. This gives us a wider and better forum in which to voice our concerns. The quicker we can extract the issue from the eurozone Ministers, the better. If the Minister is determined on his course of action, I urge him to take the route I have outlined. Any attempt to resolve the issue within the framework of the eurozone will lead to a disproportionate influence by France and Germany. In particular, there seems to be a degree of obsession on this issue at the level of the President of the French Republic as opposed to at its official or political level. It is important that we broaden the discussion into ECOFIN, the group of 27 finance Ministers who represent the entirety of the member states and many of whom share our views on this issue and recognise that it is not envisaged as a natural or built up part of the European system.

The Government must be firm on this issue. I do not know what "constructive engagement" means or what signal it will send to those who want to invest in Ireland. As stated by Deputies on all sides of the House, the key issue is the fact that, the longer this debate continues, the more serious the psychological effect on investment becomes. A prolonged debate on this subject only serves to make more difficult the work of the IDA and the other worthy agencies that attract investment from abroad. Investors in California, India or China do not know the details of the CCCTB, the mechanics of European integration or what the President of France stands for. They see that our tax rate is, in some sense, under threat.

During the referendums on the Lisbon and Nice treaties this matter was regularly raised as a scare issue. If every other sovereign in the world decided that we should not have our corporation tax arrangement, we would not be able to sustain it. It is not sustainable in glorious isolation. However, it is sustainable if one builds alliances with other member states and is diligent in one's lobbying on the Hill and in European circles to ensure the arrangement is maintained.

We are concerned that we are being asked to engage constructively in a process that may lead to our participation in the CCCTB. This is the bottom line. This afternoon, I asked the Minister how much we would save on an annualised basis if the interest on the facility was reduced by 1%. On the basis of what has already been drawn down, the saving would be small compared with the incalculable loss to the country of a common corporate tax base that would leave us open to exposure in our international investment policy.

This is my party's position on the motion. I do not want to seem churlish to the Government. It is in its early days and I wish it well in its endeavours in terms of corporation tax. However, we all need to be realistic as well. There has been a file out there for many years called "Corporation Tax". It is drawn down at every opportunity and we have to ensure it is put back in the cabinet and forgotten about.

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