Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I strongly disagree with the amendment. It is only right and proper that the Government has finally moved to close off the double Irish. On previous occasions I have made my points clearly in respect of this matter and the transcripts of the proceedings of this House show the engagement I have had with the Minister, Deputy Noonan, on it. It is obvious that either the Minister was not aware of the situation regarding the double Irish or that he misled the Dáil in the context of his assertions that nothing could be done in domestic law to close off the double Irish. Today, we are moving to close off the double Irish. Like Deputy Michael McGrath, I welcome the fact that the Government has also moved to close the loophole in respect of shelf companies. However, I do not believe one can welcome the closing off of the loophole relating to shelf companies and then be opposed to the ending of the double Irish. Such shelf companies are being established in order that certain entities might avail of the double Irish for the next five years. As stated previously, I am concerned that the double Irish will remain in existence for the period up to 2020. I do not believe there is any reason for this to be the case.

Ultimately, a very clear signal is being sent out. We are sometimes overly precious when it comes to making continual assertions about our corporation tax regime. There are very few major speeches made by members of the Government wherein it is not stated that Ireland is committed to its 12.5% corporation tax rate. That is a given. The Government, Fianna Fáil and Sinn Féin all support the 12.5% tax rate. Three motions have been agreed by the House to show that there is a united front among the main political parties in respect of this matter. It must be acknowledged that there are others, including the smaller political parties, who have a different view on this issue. It is only fair, right and proper that these individuals and entities are able to articulate that view. However, the vast majority of people elected to this House support our corporation tax rate.

The fact that widespread support for the 12.5% rate is a given should not be used as an excuse for allowing the use of what, in my view, are bad tax practices. Such practices can be used by businesses and brass plate operations because our tax code allows this to happen. I have made this point to the Minister on numerous occasions during recent years. He responded that it was all in the name and that if it were not referred to as the double Irish, everything would be fine. The reality is that our tax code facilitated the double Irish. I am not stating that anyone intentionally set out to facilitate it. In that context, it is obvious that the double Irish comes into play as a result of the way in which different tax codes interact. When the tax codes which operate in two different countries interact, the authorities in either jurisdiction have the opportunity to move in one direction or the other. This State always had the option to close down the double Irish and that is the course of action it is taking today, despite the fact that it will allow the facility to remain in place for a further five years.

I welcome what is being done in the Bill in this regard because where bad practices exist, they should be brought to an end. Pressure is mounting in respect of Ireland's corporation tax regime. Some of the difficulties which have arisen are of the State's own making. In that context, it should not have facilitated the double Irish in recent years.

This State should not have been allowing companies incorporated in this jurisdiction to have no tax residency here. We cannot control whether companies have non-tax residency elsewhere in the world but we can control their tax residency here, as happened in last year’s Finance Bill. This State should not have allowed the types of tax rulings made by the Revenue Commissioners to span 15 years without being reviewed. This subject is part of the investigation the European Commission has launched in respect of Apple.

In all this discussion, we must be mindful that there are thousands upon thousands of companies or corporations that pay corporation tax at a rate of 12.5%. They are able to avail of reliefs for legitimate purposes, such as research and development, and their effective tax rate is very close to the marginal rate. However, there are other companies that have abused the system. They make huge profits and legally avail themselves of the services of super-accountants who try to pick holes in what the Government has introduced in various Finance Bills. This will happen, and it will happen today. There is no doubt but there are people in offices today examining what has been done in the Finance Bill with a view to seeing whether there is a way to circumvent it. They are asking what type of model could be created within legal parameters in this State that would allow a company to secure more profits and pay fewer taxes to the Exchequer. This will always happen no matter what kind of Government is in place. There will always be those who will try legally to find a legal benefit for themselves. Our job is to try to be one step ahead or, when we know this practice is occurring, close it down. I am glad the loophole is being closed down today. However, it is not really being closed down today because we are allowing for a five-year tail effect. At least, there is some movement.

I am dissatisfied with a number of factors. First, the Minister played the likes of me, my party and others who suggested it was within our gift to end this as fools. That was wrong and disrespectful, and not just to me. I am thick-skinned enough to take this but I am elected on behalf of the people in Donegal South-West. I had to take the previous Government to court to assert my constitutional right and that of the people who elected me to have a by-election this time four years ago. Given my position, I understand the importance of being able to represent one's constituency and of holding the Government to account. Consequently, I am disappointed with the type of engagement we have had over this issue.

I have said on the record before that my party and I have found the current Minister for Finance, Deputy Noonan, and Department, particularly in the first few years of government, far more informative than the previous Government. I acknowledge that the Minister was open but there has probably been a shift in this regard in the past 12 months. Whether it is deliberate, I do not know. The attitude of the Minister to the subject under discussion was actually wrong. He should have been upright and honest in saying we could make the desired change within the tax code. He should have outlined why he did not want to do as requested at the time in question. Perhaps the reasons were those that Deputy Michael McGrath legitimately outlined to the Dáil today. Perhaps the belief was that a change would create unease and a view that if the Government was open to this, it might be open to other things. That is a fair response that the Minister should have given. Instead, however, he said the change was nothing to do with Ireland and that there is nothing in Irish legislation that could actually close the loophole.

Second, we acted under pressure. It is never good to act under pressure if one can at all avoid it. What we should be doing is preventing pressure from building up in the first place. This is why we should have taken the initiative. There are many people with genuine reasons for advocating the closure of loopholes and a higher corporation tax rate, but there are others of the view that we should have a higher tax rate so their state can benefit from the employment and tax revenue we bring in from multinational companies. Therefore, we must always be mindful of the various realities and where different people come from. By allowing bad tax practices to exist, one is bolstering the argument of the latter. It is not really about stopping certain tax practices but about trying to gain advantage over this State.

Sinn Féin very much believes this State should have the ability at all times to direct its own tax policy. However, by having allowed what has occurred to develop for so long, we have ceded ground to those who have a selfish and strategic interest. I am not talking about those who believe corporation tax should be increased on the basis of their political perspective but about those in jurisdictions such as France and Germany who want it increased because they want some of the benefits Ireland has been able to obtain.

I oppose the amendment. The loophole should be closed. The Government should have gone further as a five-year tail is far too long. At least, it is finally happening.

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