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

I move amendment No. 6:

In page 60, between lines 32 and 33, to insert the following:“32. The Minister shall, within nine months from the passing of this Act, prepare and lay before Dáil Éireann a report on the expected impact of the Knowledge Development Box, including its expected beneficiaries, expected tax take and cost to the Exchequer.”.

This amendment is on the knowledge development box, which is a matter my colleague, Deputy Peadar Tóibín, teased out with the Minister on Committee Stage. I have published legislation on this which has been voted down by the Dáil and it makes a mockery of the Finance Bill that we cannot put forward amendments in opposition, not that we would have any expectation of them being passed, due to the constitutional provision that only allows the Government to propose motions or amendments that would result in a cost to the State. There needs to be a constitutional referendum on that. It is not a contentious proposal and it is something the Irish people would support.

The amendment proposes a requirement for a report within nine months of the passing of the Act on the expected impact of the knowledge development box, including the expected beneficiaries, expected tax take and the cost to the Exchequer. Sinn Féin is concerned about this measure and the effect of having corporation tax repayable for those availing of this relief. We already have large companies not paying anything close to the 12.5% corporation tax rate in the State despite Government assertions that the effective rate of corporation tax is 11.8%. We have already teased this out on Committee Stage and we know that the model which came up with that figure is so unique in relation to a company that it does not reflect the types of companies we have here. We also know that Professor Jim Stewart, a lecturer in Trinity College, has recently estimated that the corporation tax rate paid by foreign firms based in Ireland was 2.2% using data provided by the US Bureau of Economic Analysis. We have other reports from multinational companies of arrangements even lower than this and some of them are very notable.

The question is whether the Department of Finance has done any impact assessment in relation to the impact of this measure on indigenous businesses. Is there a report? I have not had any SMEs knocking on my door saying this measure will benefit them given that very few of them produce and sell high value patents or other intellectual property. Given that it is geared towards the patent heavy industries such as technology and pharmaceuticals, has the Department considered how the measure will assist SMEs? Has a report been done and has a cost-benefit analysis been carried out on the measure given that the cost outlined in budget 2016 is €50 million? We will not know whether it is one company that avails of that €50 million or five or if it is the existing top ten companies because there will be confidentiality in relation to Revenue. I am interested in the type of analysis that has been done and whether the Department has conducted any risk analysis in particular in relation to our reliance on foreign direct investment and the potential for those companies to move from the State. Everybody likes to see extra tax coming into the State's coffers when it is not being peeled off households in terms of water or property tax. In terms of the corporation tax increase, something is going on there. One cannot just have a year where tax receipts increase by 50% or 60%. Something is happening and we have our own ideas of what that is. Some of it is down to BEPS and attempts by companies to get their houses in order before country-for-country reporting comes in. There may be some issues there but in any event it shows the volatility in the sector.

Has a risk analysis been done on foreign direct investment and our reliance on it? The knowledge development box again puts huge emphasis on foreign direct investment, reducing corporation tax by 50% for certain expenditures. It is a risky thing that we are doing. We have been here before. We are completing the banking inquiry process and much of the evidence we heard was of the over-reliance on property, VAT and corporate tax at the time of the property boom. The questions need to be asked in real life today. We need genuine debate instead of a throwaway remark and an assertion that there is nothing to see here.

Have we done a risk analysis? No one wants to see a flight of foreign direct investment, but it is highly mobile. When there is a year in which taxes from foreign corporations have increased to that level, it shows how volatile the sector is. I will listen to the Minister's response, but we are very concerned about the knowledge development box.

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