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

I move amendment No. 34:

In page 30, after line 40, to insert the following:

"19.(1) The Minister shall within 6 months of the passing of this Act, bring a report on the potential to raise additional Corporation Tax revenue by closing down loopholes, examining the extent, legitimacy and abuse of all corporate tax expenditures, exemptions, allowances and deductions, such as losses forward, R&D tax credits, the Knowledge Development Box, Intra-group Transactions, allowances on Intangible Assets and establishing a minimum effective tax rate of 12.5 per cent on gross trading profits and incomes.

(2) The Minister shall, within 6 months of the passing of this Act, bring a specific report and comparative study on the relative social and economic benefit of Research and Development Tax Credit expenditures, benefitting private corporations as against the investment of the equivalent funds into Research and Development in public universities.".

As we approach midnight it is appropriate that we would discuss the dark side of the Irish tax code, where the wealthiest corporations and the individuals who own them succeed in sucking vast profits using our tax system out of the view of the public and out of the hands of the tax man to enrich themselves to extraordinary levels. Sadly, most of this stays in the dark because the Government and the main opposition party, which acted similarly when it was in Government, have colluded to cover up the extent to which our tax code ensures that some of the most extraordinarily profitable corporations in the world have dodged tax and used Ireland as a base from which to do so.

This amendment seeks to require the Government to produce a report which will go through all the tax loopholes, the black holes in the tax code, forensically. These suck out tens of billions in terms of profits made by these corporations out of taxable income through the mechanisms of allowances, deductions and reliefs. These are tax loopholes which I believe were designed deliberately in order to facilitate tax avoidance by these corporations. These are a select group. The European Union found Ireland guilty of state aid but I have no doubt that it was not only in respect of Apple. It was the company which was exposed but more cases will follow. A select group of corporations benefitted from this. They were corporations which had the ear of Ministers for Finance, the Department of the Taoiseach through bodies such as the IFSC Clearing House Group and so on, who more or less wrote Finance Bills in the area of corporate tax, in order to benefit themselves. These are loopholes which, for the most part, do not benefit small and medium enterprise in this country, which do genuinely pay the 12.5% corporate tax rate. These huge spectacularly profitable corporations get away with murder because of the tax loopholes.

Seamus Coffey's report is an eye opener on this. I refer particularly to page 120 where he details the extraordinary growth in loopholes. He says Figures published by the Revenue Commissioners allow us to get a better insight into the allowances and deductions used to off-set against gross trading profits to arrive at taxable income for the years since 2011. He says that these allowances and deductions have increased from €18.9 billion in 2003 to €97 billion in 2015. That is extraordinary. Most of the jump from €18.9 billion to €97 billion has happened in recent years.

Of a whole array of tax breaks, the one most recently exposed is that relating to intangible assets. We have another amendment which deals specifically with that. This tax break benefits big IT corporations such as Apple and Facebook, which, faced with the prospect of the double Irish tax scam being closed down, moved to exploit another tax loophole in respect of tax allowances for the purchase and use of intangible assets. Coincidentally, at exactly the time they were forced, due to popular and political pressure, to move away from the double Irish tax structure, lo and behold another loophole opened up in the form of the intangible assets cap being moved from 80% to 100%. As a result, all of the purchases of intangible assets from one arm of a corporation to another become tax free. There is then an absolutely extraordinary jump from just more than €2.5 billion in allowances in this particular area in 2014 to, I think, €28 billion in one year. This benefits the likes of Apple, Facebook and Google, which move their intellectual property assets around to exploit loopholes that were conveniently opened up for them by the former Minister for Finance, Deputy Michael Noonan.

There are plenty of others as well. The research and development tax credit jumped considerably between 2014 and 2015. Intra-group transactions jumped from €2.9 billion to €9.1 billion in one year. Massive loopholes are opening up all of a sudden to the benefit of these corporations and this is against a background where profits are absolutely going through the roof. They reached the extraordinary level of €149 billion in gross trading profits in 2015, which is double what they were earning only five or six years previously. However, because of these €90 billion worth of allowances, the actual taxable income is reduced to pitifully low levels so that they can avoid billions in tax. These loopholes, and many more I have not had time to mention, need to be investigated. They need to be exposed and closed down. The public needs to know how much money we could have for health, housing and education if they were closed down.

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