Pádraig Mac Lochlainn (Donegal North East, Sinn Fein)

As the Sinn Féin representative on the Standing Order 103 Select Committee, I am happy to commend the motion to the House. It was passed unanimously by the committee after much deliberation. It reflects a united determination not only among the members of the committee but I am sure the Members of this House also to defend one of the few instruments we have available to affect economic policy to create jobs and attract inward investment.

I am conscious that, opportunistically, some of our European partners, for want of a better description these days, have sought to use the proposal as a negotiating ploy in response to the ongoing attempts by Ireland to get a better deal and move away from the EU-IMF austerity programme which is devastating the economy and our people.

The scope for manoeuvre by the committee was limited and within the context of subsidiarity. One could apply it in purely technical and legalistic terms, but I note from looking at the responses of some of the other parliaments, in particular the Dutch and British Parliaments, that they clearly associate sovereignty with subsidiarity. It is very important for us to do so also, since so much of our economic sovereignty has been taken away. That was a key focus for us. It is important to state how the British Minister presented the issue in the debate in the British Parliament which issued a reasoned opinion similar to that of the Dutch Parliament. It is important for the public to understand its implications. It stated:

The draft Directive would:

- provide for a single set of harmonised rules for calculating the tax base for taxable profits of companies resident in Member States;

- allow companies to opt into the CCCTB or to continue to operate within national tax systems;

- allow groups of companies to calculate their total EU-wide consolidated profit for tax purposes;

- provide for that profit to be allocated to companies making up the group on the basis of an apportionment formula composed of sales, payroll, number of employees and assets in each Member State; and

- provide that Member States would then tax the profit apportioned to companies in their Member State.

To simplify the matter, we could retain our corporation tax rate at the current level, but if this proposal was applied throughout the European Union, much of the profits made by companies based here would be redistributed to other member states. Reports carried out on behalf of the Department of Finance demonstrate that the economy and the people would clearly lose out as a result of this proposal.

The quantitative and qualitative aspects of the proposal were picked up on by the committee. The reports emanating from the European Commission to advance the proposal were poor in comparison to thiaw the Department had prepared. They failed to adequately demonstrate the mutual benefits of thw proposal across all member states. The committee in its deliberations and recommendation to the House strongly referred to this aspect, which was alarming.

It has been on the agenda of some member states to go after sovereignty, look for harmonisation and pull us into a one-size-fits-all policy. We see from what has been happening to the euro and the European economy how dangerous that could be. I refer to the comments and concerns of the Dutch Parliament in this regard. We have concluded our deliberations, but the Dutch and British were stronger in their reasoned opinions. They did not focus only on the issue of subsidiarity, they also spoke about proportionality - two headings under which we must assess European Union legislation. The Dutch state the proposal does not adequately indicate that action at EU level is preferable to the current situation where member states act individually; the proposal would not be beneficial to all stakeholders; the impact assessment clearly sets out many disadvantages for individual states which require comparison against the proposed benefits; the proposal might only have a very small positive impact on the general well-being of the European Union as a whole but would have a negative impact on the GDP and well-being of some countries, including the Netherlands; the proposal could cause budgetary losses at national level because of a smaller tax base; the proposal is badly timed in the current economic climate; and that in accepting that the impact on the revenue of individual member states would depend on their mix of taxation and policy choices, the Commission is indirectly interfering in the field of direct tax rates. Again, they are concerned about the sovereignty issue. The Dutch House of Representatives recommends caution for reasons of practicality and principle and refers to proposals that encroach on national sovereignty. I could quote from the reasoned opinion of the British Parliament at length, but it is broadly along the same lines. There is concern, therefore, and not only in small member states on the issue of sovereignty.

The position may have changed since it reported to us at the committee, but I was concerned about the Department of Finance's initial advice to us. It advised initially, on a preliminary basis, that the proposal complied with the principle of subsidiarity. I am mindful of the fact that in 2007 it stated the CCCTB proposal cut across national sovereignty and subsidiarity. That was the strong link it made to the sovereignty theme. However, it advised the committee on a preliminary basis of this. I am not satisfied the response given to us shows a change of opinion over such a short period of time and on such an important matter.

When campaigning against the Lisbon treaty, Sinn Féin and many others outlined that the Irish State and other member states retain the veto over corporation tax. The difficulty was that under qualified majority voting and other mechanisms, particularly enhanced co-operation, there is potential for enhanced co-operation even when a number of states have vetoes, reasoned opinions and the yellow card system at the European level. A number of European states can move on this, meaning there will be significant difficulties for Ireland if the member states happen to be France, Germany and Italy. Products manufactured here are exported for sale into those economies. We need to be vigilant.

There have been repeated German and French calls in recent times for a quid pro quo. They have repeatedly linked a reduction in the interest rate and CCCTB. Sinn Féin stated this is not the core issue in regard to the IMF-ECB-EU austerity programme. I refer to the cut in the interest rate, our corporation tax levels and the need for us to change. We are in difficult times and we must stand our ground. Collectively, we must concede nothing more. We are also mindful of the euro pact, which is the environment we are working in at the moment. I wish to cite the pact: "Developing a common corporate tax base could be a revenue neutral way forward to ensure consistency among national tax systems while respecting national tax strategies, and to contribute to fiscal sustainability and the competitiveness of European businesses." We must be worried about this and the Government must be focused on it. The objective of those controlling most of our affairs is to move in this direction. There is no room for complacency. I am mindful of the limitations we are under because of the austerity programme. One of the key instruments for a government is control of currency and control of interest rates. In response to its crisis, the British Government was able to devalue the currency by one third. This was a major stimulus for exports to the British economy. It was able to consider interest rates and cool down or drive forward the economy. These are major instruments that have been taken away from Ireland at this point. The capacity to invest in our economy to stimulate it has also been taken away from us. The recent jobs initiative contains some well-meaning initiatives but it was tinkering around the edges. We need a substantial investment, utilising the resources of the National Pensions Reserve Fund and investing in infrastructure and job retention programmes. The latter is similar to what is in place in Germany, with businesses that have succeeded and can succeed again being subsidised. That makes sense from the perspective that every person who signs on costs the State €20,000. It makes more sense to subsidise viable employment. These imaginative initiatives need real resources and cannot be done because of the shackles of this austerity programme. Every eminent economist on the international scene, whether on the left or right, acknowledges and accepts the terms and conditions as applied to Ireland are unsustainable. We cannot deliver growth in our economy on this basis. Similarly, Greece cannot do it and Portugal will struggle. This project comes from the same people who wish to sustain the euro by punishing the people of the peripheral states for the collective crisis caused by the ECB and international financiers who failed in their regulatory responsibilities. These people got it dramatically wrong and they want to promote CCCTB. We must learn to be once bitten, twice shy.

The requirements to have control over corporation tax is a key instrument of Government. We have lost so many and conceded so many to our cost. We cannot concede another one. We must remain vigilant about the idea of enhanced co-operation and the ability of other states to undermine, by the back door, the will of the Irish, the Dutch, the British and the Polish people. We must be vigilant and focus on this point.

I am concerned about the preliminary advice of the Department of Finance. Maybe it has changed since it gave it to us but it is concerning, even if it was given on a preliminary basis. These are the very people who were accused by Morgan Kelly of doing a poor job of negotiating on our behalf with the ECB. These are the people who Morgan Kelly accused of suffering from Stockholm syndrome during negotiations, which will have major implications for people. We need to ensure that on this issue, they are defending this national interest. I was disappointed with the preliminary advice, even if it is limited to the tight, technical constraints of subsidiarity.

Fine Gael and Labour MEPs supported the Bersani report at European level but I am pleased to see that, in this Parliament, they have moved away from that position. They see the danger of what began at that level. We need to be vigilant and we need to monitor the situation. We have taken the first steps and I am sure the House will endorse the recommendation of the committee. This will send the collective message to European policymakers. I am sure other parliaments will do the same. Let there be no doubt that this is not the end of the process. There is a long journey to run.

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