Paul Murphy (Dublin South West, Socialist Party) | Oireachtas source

We live in a corporate welfare state that has not developed accidentally. It is the developmental model of successive Governments, driven by Fianna Fáil and Fine Gael. It is an ideology to which the parties are absolutely wedded. It is based on the notion that the only way to attract investment into the country is by winning the race to the bottom, be it through tax competition, in respect of which the only winners are the big corporations, or data protection, labour regulation or other means. The issue that epitomises this most, and which I believe will cause a scandal among people, is that which relates to Apple and to which Deputy Boyd Barrett referred. If the people knew the position of the Government is to say to Apple that it does not want €17 billion in tax seemingly owed to the Irish taxpayer and that we are to join the company in a fight against the European Commission to ensure taxpayers do not get that revenue - which could wipe out the housing crisis, for example, by building enough homes for everybody on the housing waiting list - they would regard it as an absolute scandal. This epitomises the approach of the Government, which is to say corporations and multinationals should pay nothing based on the idea of trickle-down economics. This idea, which informs all of its thinking, is based on the belief that another benefit will somehow accrue eventually.

The knowledge benefit box is a precise replacement for the double Irish arrangement. The phasing out of the latter began in last year's budget. The knowledge development box began to be phased in with last year's and this year's budgets and it will begin to take effect next year. It is what it is. Ireland has not invented the knowledge development box. It is just a version of the patent box regime that exists in a number of countries. I referred in a previous debate to a paper by PricewaterhouseCoopers that asks the Minister directly whether it is time for the country to consider the patent box. The paper contains the telling observation that "Countries without a patent box regime generally have higher effective tax rates which may make it difficult to adopt the patent box.” The purpose of the patent box is to lower the effective corporation tax rate. It is a tax scam to facilitate multinationals in avoiding as much tax as they can possibly avoid. It is at the expense of our society and societies across the world as the Government drives the tax competition model in respect of which it is a major culprit.

I have some questions for the Minister. The estimated cost of this provision next year is €50 million. That seems low for a measure that is to replace the double Irish arrangement. Is the figure to increase, as I suspect it will, over a number of years? Is the knowledge development box's cost expected to rise from the €50 million mentioned in the budget to €100 million, €150 million, €200 million, €250 million and €500 million as it replaces the double Irish over time and becomes the main tax scam that multinationals in this country will use? How did the Minister come up with the figure of €50 million and does he expect it to increase?

As far as I can tell, the scam is a two-way process from the point of view of the corporations in terms of investment in so-called research and development. At present, the corporations receive tax relief for expenditure on research and development. There is a 25% refundable tax credit. The corporations get a tax benefit or credit based on expenditure but, as far as I can tell, they will also benefit from a half rate of corporation tax on the income. They win both ways, that is, in terms of expenditure on research and development and on the income on the other side.

My final question relates precisely to the point that this is an intangible. How on earth does the Government propose to establish that ideas are produced in Ireland and that the tax break should consequently apply here? What is to stop multinationals simply funnelling all their so-called innovations through this State in order to avail of the lower tax rate and keep the double Irish scam rolling, which, I presume, is the purpose of what is happening here?

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