Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

The issue of corporate tax avoidance, aggressive tax planning or, to put it in more accurate language, wholesale tax evasion by the biggest, wealthiest and most profitable multinationals is the most urgent issue that needs to be addressed in the global economy and for the sake of humanity. The failure of these corporations to pay a fair and reasonable amount of their profits back into society to fund the infrastructure, services and incomes of ordinary citizens through taxation has run alongside and is directly connected to a staggering growth in inequality and an increase in the gap between rich and poor. One cannot separate these two matters. When Oxfam produces a report stating that next year the wealthiest 1% of individuals in the world will have the same amount of wealth and assets as the other 99% of society, that is a stunning, staggering, and hard to comprehend indictment of our economic system. One of the facts with which people are probably familiar is that the 180 richest individuals have more wealth personally than the 48 poorest countries in the world and there is a direct overlap between the wealth of those individuals and the corporations of which they are CEOs. Many of these corporations that are responsible for this incomprehensible concentration of wealth in a few hands are based here and that also is not a coincidence.

I and most of the world are convinced, despite Government denials, that Ireland is at the centre of an international nexus of tax avoidance and tax evasion, the result of which has been a truly stunning concentration of wealth in the hands of these corporations and those who own them at the expense of society in general, in particular the less well-off. The global growth in inequality of wealth is clearly echoed in the figures in a previous motion which we discussed a few months ago and some of which are referred to in the motion under discussion. The estimates we include are the conservative estimates produced by TASC which suggest that the wealthiest 10% of the population in this country has 42% of the wealth, while Credit Suisse estimates that 10% has 58% of the wealth. Whichever is correct, it is shocking inequality. At the same time, poverty and deprivation have increased dramatically such that 750,000 people in this country live in poverty, including 250,000 children. We have the worst housing crisis in the modern history of the State.

I have just come from the Department of Finance pre-budget briefing which was very interesting, but it bears out the same picture. Corporate profits have shot through the roof yet again in recent months.

The increases have been stunning. When we asked the Department of Finance officials if they could explain the enormous jump in corporate tax revenue recorded for the past six months, they could not explain it. It represents a 20% increase in profits, overwhelmingly concentrated in the hands of these same multinationals. This is happening at the same time as a chronic lack of investment in public housing and, as a result, homelessness levels going through the roof. We desperately need investment in all sorts of areas of infrastructure and schools. Our water infrastructure is in a state of collapse. Our hospitals have been gutted of money and investment to the tune of billions of euro and our health services are in a state of emergency. This is happening at the same time as corporate profits have gone through the roof, and there is no explanation.

While it is utterly unjust, it is also the explanation for the fragility, vulnerability and crisis-prone nature of the global economy. Although Thomas Piketty and others have pointed this out, it does not seem to be taken on board by the political elites in Europe, the economists, departments of finance or the ECB. They do not seem to comprehend that this level of concentration of wealth is not just unfair but very dangerous. It is a recipe for another crash. I saw a shocking graph which showed the reduction in lending by banks to the European periphery countries, including Ireland, Greece and Portugal, all of which have been in reverse since 2008. At exactly the same time, lending to China had increased in the same proportions. There has been a massive reduction in bank lending to Europe, which is at the back of the economic collapse and the austerity that follows, while all the speculative money moves to China. How can it happen?

It has created a bubble in China, where massive capacity has been built up. However, there is nobody to buy the goods given that everybody else has been hammered with austerity and eventually somebody will realise it is unsustainable, the money will run out of China, the Chinese economy will collapse and further ramifications will hit the entire global economy. Such crazy fluctuations can happen only because of the incredible concentration of wealth in the hands of a tiny number of corporate and financial bodies which are accumulating massive profits and exponential profit growth. These groups, accountable to nobody and paying no tax, can create a bubble for a while in an economy and bring it crashing down just as quickly.

This is not just about disgusting inequality and unfairness, whereby people are hammered with tax, austerity and cuts while profits increase and the corporations pay nothing into the infrastructure that sustains them as well as the whole of society. It also creates the crisis-prone character of the entire global economy, which is an accident waiting to happen. While there is a consensus that we must do something about it, the Minister for Finance, Deputy Noonan, who has been pushed into it because everybody is screaming about Ireland’s central role in it, says we must not go too far. He is quoted on the front ofThe Irish Timessaying we should not go too far. The base erosion and profit shifting, BEPS, project is just a set of guidelines; it is not binding; we are not required to do it. The Minister, Deputy Noonan, is already saying we should not go too far with any of it and denying what successive Governments have done to facilitate this or turn a blind eye.

At our press conference earlier I made a point that I want people to take on board regarding the technical paper produced by the Department of Finance on effective corporate tax rates, about which there is much dispute. While the US says our effective corporate tax rate is 2%, EUROSTAT says it is 6% and the Government says it is 10.9%. While one can mess around with figures, accounting and different calculation methods to obscure the reality, the truth is in the tables produced by the Revenue and published by the Department of Finance. Only last week, when we were preparing the motion, I discovered something that tells the whole story. I cannot believe the Government or Revenue did not notice it and say there was something wrong. I refer to the deductions which allow multinational corporations, primarily, to reduce their taxable profits.

Corporate profits are increasing overall. In 2006, gross trading profits were €72 billion while in 2011 they had increased slightly to €73 billion. They have probably increased a little by now; these are the latest available figures. Why do we not have corporate tax figures for after 2011? Why is there a four or five year lag? In itself, this means there is no transparency. In 2006, the total income, given that there were some allowances, was €59 billion and the deductions were €5 billion. In 2011, the total income was €61 billion, but the deductions had increased to €21 billion. The deductions are mostly related to trade charges, whereby one subsidiary of a multinational charges another subsidiary royalties for the use of patents. One part of the company is taxable here while the other is not, but pays tax in the Cayman Islands or somewhere similar. Such trade charges increased from 10% of total profits in 2006 to 33% in 2011. In other words, the multinationals are saying that whatever they do to increase their profits, they will increase the price they pay to themselves to get the profits off the books of the company that is taxable in Ireland and onto the books of a subsidiary of the company that is not taxable in Ireland. They do it completely arbitrarily.

I cannot believe the Government or Revenue does not look at the figures and say, “Jesus! How did that happen?” How can their deductions treble within a couple of years without anybody saying that something fishy or some sharp accounting practice is going on? Either it is gross incompetence or we turned a blind eye because we knew exactly what was going on and we decided to do nothing about it. None of it brings us to the question of the 12.5%. It is just about enforcing the 12.5% and ensuring the multinationals are not taking the taxpayer, the tax system and Irish society for a ride by playing around with sharp accounting practice in order to write down their taxable profit. At stake are billions of euro that could have gone into housing, infrastructure and health, and we have done nothing about it. When the European Commission finally screamed "foul" and said we had special deals with companies such as Apple, the Government tooled up with lawyers to fight to ensure we did not get some of the money back.

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