Willie Penrose (Longford-Westmeath, Labour) | Oireachtas source

7 o’clock

There have been thousands of words written and volumes of speeches made by people pontificating about their understanding of the implications of the recent Commissioner for Competition's decision on state aid purportedly afforded by the Irish State to Apple plc. I am inclined to review this issue as a lawyer looking at same from first principles, in terms of its efficacy from a legal perspective and its overall legality but we are hamstrung by the fact that the full text of the judgment is not available. We all subscribe to the objective of collecting in a legal fashion each and every penny of tax due, which is important in terms of the provision of social and public services for our citizens.

The Labour Party has tabled several amendments today and I urge the House to support them. One amendment is to get the agreement of the House to the principle that every profitable company should pay a real and reasonable level of tax. Our 12.5% rate has brought jobs and investment to Ireland and is a cornerstone of our industrial policy to date. It clearly should remain in place. It is sacrosanct and should be protected. It has drawn some jealous eyes from other places. I am very attached to the effective tax rate which is extremely important. There have been too many avenues, ways, options, allowances and incentives to reduce the nominal tax rate to a small percentage. I subscribe strongly to the amendment tabled by the Labour Party that the effective tax rate would become the normal tax rate. Initially it should be around 6.2%. That would be desirable and would certainly see a significant increase in the tax collected.

An editorial in today’s Westmeath Topic, a locally produced, published and owned country newspaper has got the issue spot on when it describes how in the current forum of the debate across the globe, on Sky News and so on, Ireland is in effect a pawn of the EU in its battle with the USA. We are all aware that 350,000 jobs are produced in this country by up to 1,000 or so multinationals, how important they are, and how their families and others derive benefits from them. I want to see a greater emphasis on domestic and indigenous firms to give them the opportunity to create sustainable and long-term employment as small, indigenous and local firms have done in the past. There are 700,000 jobs in those firms.

Under the Lisbon treaty we were assured that Irish taxation policy lies exclusively within the competence of our sovereign Government and that it is sacrosanct and immune from interference by any European country or institution. This commitment was reinforced by EU law but this seems somewhat hollow in the context of Commissioner Vestager’s decision. A simple question arose for me immediately upon hearing of the EU judgment. How could anyone rewrite corporate tax rules so as to create a fog of uncertainty and undermine the rule of law - our tax laws are written under statute - and bring into the heart of the matter the retrospective application of tax laws? This is a breach of common law principles underpinned by statutory interpretation. It is interesting to see an EU institution wanting to seek collection of these taxes retrospectively when, notwithstanding its solemn commitment to retrospectively deal with bank recapitalisation in respect of our bailout it welched on that commitment and engaged in mealy-mouthed and pious platitudes. It is clear hypocrisy, which is breathtaking. It is no wonder people continually question how the EU operates and feel detachment from it. This is the type of action that brings that type of cynicism to the fore. I cannot understand how that can apply, how one can arrange one’s business with certainty, which is certainly a breach of another important EU principle of legitimate expectations whereby one is assured that when one complies with the law pertaining in all respects, any amendments or changes to be made will be made prospectively.

Worse, it conjures an image of funny money, in terms of a €13 billion windfall, possibly increasing to €19 billion with interest over a ten year period. To illustrate the phantom nature of the exercise, in reality if the European Court of Justice, ECJ, were to uphold the decision of the competition Commissioner we might not get a tosser, if Apple is forced to cough up. It will be coughing up because it will put the money into an escrow account or a spending account for the next four months and nobody can touch that in the interim. The USA, which permits a tax deferral system, could collect most of the money if it is due on the basis of research and development, industrial patents and original concepts. Other EU countries and countries in the east will be at the coalface seeking their share as they will be entitled, according to Commissioner Vestager, to their tax share, only for specific activity that takes place in their jurisdictions.

This is precisely what the Revenue Commissioners have always done as required by law. They have collected the tax due on activities that are specifically related to sales on products that arose in Ireland. That is the gold standard for tax collection and the Revenue Commissioners are scrupulously fair, efficient and effective and are clearly independent in that role. Like everyone else, I have numerous ways to spend additional money if it is ours to collect: €25 million is immediately required for the construction of new operating theatres and other important facilities in the Midland Regional Hospital in Mullingar but we have to live in the real world, as distinct from the imaginary world or the world we would like to have. The EU Commissioner has entered into the political arena at a level I thought was reserved for the European Parliament and the Council of Ministers, has directly interfered with our tax policy and in the process has created a fog of confusion about future tax policies.

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