Paul Murphy (Dublin South West, Anti-Austerity Alliance) | Oireachtas source

I move amendment No. 88:

In page 67, between lines 21 and 22, to insert the following:

“25. The Minister for Finance is to order a study to be carried out on methods to increase the corporation tax take from big business, including by doubling the rate of corporation tax for big business to 25 per cent and abolishing corporation tax breaks and is to report to the Dáil within six months of the enactment of this Act on the findings of this study.".

This relates to the tax that dares not speak its name unless it is going downwards; it is the question of corporation tax. The Minister, Deputy Noonan, has indicated that the rate has never been and never will be up for discussion. In other words, corporation tax is beyond the realms of democracy and debate in this House and this country. We fundamentally reject that. It is not in order for us to put forward proposals to increase the rate of corporation tax or eliminate loopholes and so on. This proposal is for a study to be carried out on methods to increase the corporate tax take from big business, including by doubling the rate of corporation tax for big business to 25% and abolishing corporation tax breaks. The report would come before the Dáil within six months.

There is much context to this but the first example is the European Commission ruling about Apple's unpaid €13 billion in tax with substantial tax to be added. This demonstrates quite decisively what the Anti-Austerity Alliance, People Before Profit and the left has argued, which is that Ireland functions as a tax haven for big business and the wealthy, and the losers in this are working people in this country and all across the world. The Government and Fianna Fáil may not like to hear about the reality but Apple is only the tip of the iceberg. More cases will be taken by the European Commission in this respect. We know Google paid a corporate tax rate of 0.14% between 2005 and 2001 and Starbucks paid a grand total of €45 last year. That is €45 and not €45,000 or €45 million. We know vulture funds feasting on the carcasses of a property crash pay €250 in tax on billions of euro in assets.

That is it and Ireland is a corporate tax haven. In the context of the debate on Apple, this was sold to people as being very important because foreign direct investment, according to the Minister, Deputy Noonan, is the seed potato of economic development. It is 60 years since these seed potatoes of attracting foreign direct investment through low corporation tax were first sold to people as a temporary measure to give the Irish economy a leg-up after years of colonial underdevelopment. That has not worked and Ireland still lacks an indigenous industrial base. Even at the height of the boom, indigenous manufacturing employment was only half of the EU 15 average, productivity in Irish-owned firms is low and a few multinationals account for the vast majority of supposedly Irish research and development investment, which still remains lower than the EU average. That is linked to the low multiplier effect of multinational corporations in our economy. They buy few inputs in Ireland and they horde or repatriate much of their profit. Apple is a clear case in point as many of Apple's divisions are headquartered here but the $200 billion or so of retained profits are not invested here.

We know multinationals offer fewer direct economic benefits and between 2000 and 2015 there was a net increase of only 21,500 full-time multinational jobs, equating to approximately 1,300 per year. It is also estimated that half of Irish service exports are fake in the sense that most or all of the declared activity really happened somewhere else with a higher rate of corporate taxation. This is becoming a global story. I referenced earlier the more than 60% of people attending the Web Summit who believe Ireland is a corporate tax haven.

In 2010, The New York Timesestimated that almost a quarter of Irish GDP came from ghost multinational corporations declaring profits here to minimise their tax bills. If one looks at the list of the top ten Irish companies, one will see that three of them are multinationals redomiciled here as part of a tax inversion. It took the Apple case and the leprechaun economics incident, when it was suggested that we had a 26% GDP growth rate, to bring attention to this. The reality that 80% of corporation tax in this country is paid by multinationals can be explained by the fact that such companies are funnelling huge amounts of profits here to avoid paying as much tax as possible. The third biggest Irish company, Eaton Corporation, declared profits of €19 million per Irish worker last year. Irish workers are very productive and create lots of profit for their employers, but this is clear evidence of the use of Ireland as a tax haven.

The brutal point that needs to be made is that this is finished as a strategy. It is clear from the international picture - the Apple case, the suggested 26% growth rate, the Brexit vote, the election of Trump and recent events in Hungary - that the space for the Irish establishment to pursue its strategy of facilitating the exploitation of Irish workers and resources and the non-payment of tax by European and US corporations is closing quickly. Such corporations are the only winners from tax competition, which is a disaster from the point of view of ordinary people. Ireland has been a driving force in the race to the bottom in terms of corporation tax. As a consequence of the reduction in average corporation tax rates across the OECD from 49% in 1981 to 32% in 2012, vital public services such as those relating to health and education have been starved of resources. The impact is even worse in developing countries. The winners of tax competition are those who avoid paying taxes. The losers are the workers and public services in this country and around the world.

We believe it is time to call a halt to the policy of low corporate taxation in this country and elsewhere. In co-operation with other countries, this country should reject the race to the bottom and say that corporations should be forced to pay an increased rate of tax. The Department of Finance has refused for the first time to officially cost our request for increases in corporation tax. It has done this in previous years by setting out how much would be raised through such a move. That is one of the reasons I am raising this question. The Anti-Austerity Alliance proposed in its alternative budget statement that the rate of corporation tax should be doubled for profits in excess of €800,000. In other words, a new marginal corporate tax rate of 25%, or twice the current rate, should apply in the same way that PAYE workers pay marginal rates of tax that increase as income goes upwards. Obviously, the corporation tax rate would still be lower than the highest rate of tax paid by PAYE workers. We estimate that this would raise at least €3.5 billion. That seems to us to be quite a conservative estimate because the reality is that corporations in this country do not pay 12.5%. Many companies pay 0%. The average is probably between 6% and 8%. We receive approximately €600 million in additional revenue for every 1% increase in the effective rate.

We are calling time on the corporate tax haven strategy. We are saying that corporation tax should be increased. We reject the idea that discussing such an increase should be a taboo in Irish politics. We have set out our ideas for how the additional resources that would accrue from such a change could be used to invest in public services and to pursue a real socialist industrial policy of sustainable public investment that can create sustainable economic and environmental growth as part of the necessary radical transformation to a socialist economy of public ownership of our key resources.

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