Enda Kenny (Mayo, Fine Gael) | Oireachtas source

Deputy Martin has raised a number of questions.

I am invited to attend the G8 summit at Lough Erne as the holder of the Presidency of the European Union. Clearly, Ireland is not a member of the G8. I made it clear when speaking to President Obama that the issue of major concern in that context was to have the agenda for the EU-US trade area discussed. What we hope to achieve during our Presidency is approval for the mandate to open the discussions and negotiations. If that were to happen before the end of June, it would be significant in its own right in terms of what the potential is, but it will not be easy. The argument will apply to genetically modified organisms, GMOs, on the one hand, and interaction between the European Union and the United States in the agri-sector, on the other. A number of countries have particular difficulties with this, but the overall imperative should be to get approval for the mandate in order that the discussions can be opened. This comes as a result of a high level report from both the United States and the European Union that was generally favourable and positive towards such an outcome. If the Irish Presidency can achieve this, it would be important.

The Deputy has mentioned issues about the development of economies and taking meaningful action. It is important from the European perspective to see what is happening in the United States. The energy capacity of the United States will have a significant impact on Europe and beyond. Energy costs in the United States have dropped by 30% to 33%, whereas in Europe they are tending to rise. This is due to the activity in the United States on drilling, fracking and shale gas. Fixed prices are being offered for long-term periods for major investments and the indications are that the United States will become a net exporter of energy within the next decade. That will have an impact on the geopolitics of the Middle East and beyond and the issue of Europe getting its act together in terms of the eurogrid and the opportunity for it to have a consistent, stable and competitive energy price regime. This is important for major industry and small and medium enterprises, SMEs, across the European Union. These comments relate to the EU-US trade issue.

The question of a European Union stimulus for investment and job creation opportunities is absolutely critical. There are 26 million people registered as unemployed, of whom 19 million are in the eurozone area. This is not acceptable to anybody. One of the issues of real importance is that of banking union. This is essentially a banking crisis that has infiltrated into the economies of the European Union and the eurozone. I hope substantial progress can be made at the meeting in June. The Deputy is aware of the progress that has been made such as on the single supervisory mechanism, the CRD4 or fourth capital requirements directive and the question of resolution and recovery. However, banking union is a credibility test for how serious European leaders are about dealing with this issue. It is one that will have serious direct implications for the improvement of the situation of many countries.

One of our other priorities is to seek a resolution in respect of the multi-annual financial framework, MFF. The Deputy made a point about CAP reform. The Minister for Agriculture, Food and the Marine, Deputy simon Coveney, has been working diligently on the matter. There were allegations that there would be a cut of more than 30% in the agriculture budget. It is less than 10%, which is very significant when the indications from all the so-called knowledgeable sources were that it would be in excess of 30%.

We cannot have a European budget without the authorisation of the European Parliament. This arises from the Lisbon treaty. We discussed this issue with the President of the European Parliament when the European Parliament voted overwhelmingly to reject the Council budget. President Schulz said clearly that there would not be an MFF until we dealt with the deficit for 2012-13. The only moneys that can be spent in Europe are paid in by countries under particular arrangements and conditions. The absolute legal ceiling for the deficit is €11.2 billion. The Tánaiste and I flew to Brussels and met President Schulz and President Barroso to discuss this matter and clear the blockage, if possible. The conditions set down were that there would have to be a sizeable first tranche to be paid up front on receipt of bills from the Commission and that at the end of the year the remainder, whether it was €3.9 billion or €4 billion, would be paid by the contributing countries. The President wanted a legally binding guarantee from me on that issue. However, I did not have a mandate and could not give it. However, the Minister for Finance was able to get the first tranche of the payment of €7.3 billion through ECOFIN, which leaves €3.9 billion to be paid at the end of the year. In return for dealing with this question, the parallel discussions on the MFF were begun by the Tánaiste with Mr. Lamassoure, but the European Parliament has not been as forthcoming as it said it would be with regard to movement on the MFF. I hope the matter can be resolved and that during the course of our Presidency we can reach a conclusion on both the acceptance of the figure of €7.3 billion, for a start, in respect of the deficit for 2012-13 and on the MFF for the period 2014 to 2020.

The question of the OECD and corporation tax is important and being commented on in the media. The system operating in Ireland is open and transparent. The headline rate is very close to the effective rate. According to a recent study by PricewaterhouseCoopers and the World Bank, Ireland's effective rate stands at 11.9%, compared to the statutory rate of 12.5%. That is very different from the situation in other countries, where there is a substantial difference between the statutory corporate tax rate and the effective tax rate. In some places the tax rate is over 33% but the effective rate might only be less than 10%, depending on the location and the sector involved. The corporation tax rate in Ireland has been a fundamental cornerstone of the country's attractiveness for foreign direct investment. It is not the only one, but it is one that has been consistent and clear for all companies wishing to invest here. Since the 1950s there has been a consistent Government policy to use a competitive corporation tax rate as a means to attract investment and jobs to Ireland and a deliberate decision was made to ensure our corporate tax system would be transparent and that our competitive rate would be applied to a very wide tax base.

In response to Deputy Micheál Martin's question, Ireland does not do special tax rate deals with companies. We do not have any special extra low corporation tax rate for multinational companies. As our tax system is statute based, there is no possibility of individual special tax rate deals being done for companies. All companies pay the standard rate of 12.5% on their trading profits arising in Ireland and a corporation tax rate of 25% on their Irish non-trading income. Reports of a lower effective tax rate appear to arrive at their figures by running together the profits earned by group companies in Ireland and other jurisdictions and incorrectly suggesting the Irish tax rate does or should apply to both. Differences arise in the legal and tax systems between countries. International tax planning takes advantage of these differences in national systems and rules.

The OECD has confirmed that Ireland's tax rate is clear and consistent. Ireland is an active participant in the OECD project on base erosion and profit shifting. Ireland was one of the first countries to sign the agreement with the United States to improve international tax compliance, an implement called the Foreign Account Tax Compliance Act, FATCA.

This type of agreement, which shares information between countries and tax systems, is now being hailed as the emerging international standard for the automatic exchange of tax information. Differences do arise in the legal and taxation systems between countries. International tax planning takes account and advantage of these differences in national systems and rules. Concerns typically arise from the result of the interaction of the tax regimes across countries in which global companies operate rather than the law or the practice of any individual country. The best ways to deal with this are for countries to work together, as Ireland does both at EU and OECD levels, to examine the structures and to consider how international rules can be implemented to ensure fair levels of taxation. Ireland is fully supportive of international efforts in this regard and, as I stated, it is an active participant in the OECD project on base erosion and profit shifting. Our statute-based corporate tax system is clear, transparent and consistent, and it is spread right across the sector. The use of other international facilities to effect changes in respect of which Ireland will participate is a matter for consideration.

The Minister for Finance and EU Tax Commissioner Semeta sent a joint letter to the Ministers for Finance of the other 26 countries outlining seven areas where concrete action could be delivered in the short term in regard to tax avoidance. That is being followed through. This matter is central to discussion at the European Council meeting this week.

I met a number of Congressmen and Senators in Washington regarding the undocumented Irish. The remarks that the Deputy makes about the J1 visa concern proposals only. Obviously, when proposals are made, the final result can be very different. Information was given to me yesterday and the day before on progress being made in regard to the E-3 visas. Apparently – I cannot speak for the Senate or the Congress – it may well be that the Senate might adopt a comprehensive measure that would include significant benefits for a country such as Ireland. It appears as if the Congress may be divided on some elements. Clearly, as the Deputies are aware, if there is a difference of opinion between the Senate and Congress, the matter proceeds to conference. Persons are appointed from each group to deal with the issues that constitute the point of disagreement.

As far as I can figure out from the information being given to me, Ireland will benefit greatly from a path to citizenship and legitimacy under the system that is currently in place and the comprehensive Bill under the Senate. If the new arrangement is put in place, there will be a system of renewable two-year visas which could apply for quite a long time.

We all have an interest in this matter and I hope there will be a successful conclusion. I understand the Senate Bill may be taken fairly soon. I spoke to Senator John McCain at some length about this matter. He was favourably disposed towards the principle. It is important from an Irish perspective that the arrangement not be limited to very high-level skills alone. We would make the point that those who might wish to travel to the United States to work, in whatever trade or sector, should have the opportunity to do so. We were very clear on that. It is a matter for the Senate. We support the passage of the legislation, obviously.

The Deputy referred to family farms and the European Union. The Minister for Agriculture, Food and the Marine, Deputy Coveney, is very conscious of this. He has been a very consistent and strong advocate of the retention and preservation of family farms. His success in the debate on the Common Agricultural Policy speaks for itself.

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