Paul Murphy (Dublin South West, Solidarity) | Oireachtas source

I went back to look at the debate in the Dáil when this cap was removed to enable full exemption on intangible assets. The change was brought in by the then Minister for Finance, Deputy Michael Noonan. He said:

Section 35 provides for additional enhancements to section 291A of the Taxes Consolidation Act 1997 which provides capital allowances for expenditure incurred on the provision of certain intangible assets for use in an Irish trade. It removes the current cap on the aggregate amount of allowances and related interest expenses that may be claimed and amends the definition of intangible assets which may qualify for the relief to specifically include certain customer lists.

That is it. It is completely innocuous. It was simply a paragraph in a Second Stage speech by the then Minister for Finance.

However, it is difficult to avoid the conclusion that the Minister knew what the consequence would be. He knew he was facilitating massive tax avoidance by Apple and other corporations. He knew that working with intangible assets is a key mechanism by which these companies avoid taxation. He knew that what subsequently happened would happen. As the Government is aware, what happened was an explosion of foreign direct investment in intangible assets. The relevant figure went from approximately €3 billion to approximately €29 billion. That was an explosion of €26 billion as a result of one paragraph in that speech and one law that was changed for the benefit of these corporations.

We need answers from the Government. It is good that the Government is going back to change this under extraordinary pressure. How can the Government justify the original change being made? We can read papers on what qualifies as, and the indicators of, tax havens. There is a paper by Taylor, Richardson and Lanis based on data from Australian and US companies. They identified large inward movement of intangible assets as tending towards proof of the country in question being a tax haven. It is a key indicator of a tax haven. Ireland has this by the bucket-load in view of the explosion in activity that has taken place.

The Government has a problem in light of Seamus Coffey's paper. The paper highlights the explosion of €26 billion and explains why it occurred. It also explains that if the 80% cap had been in place in 2015, then almost €6 billion of these allowances would not have been allowable and would have been subject to tax in 2015. Had that been the case, up to €722 million in additional corporation tax would have been collected in 2015. Seamus Coffey went on to say that we do not know what impact not removing that cap would have had and he said that it is unknowable. The point is the measure does not add anything to the Irish economy. The Government likes to talk about jobs, etc., but the movement of these intangible assets has nothing whatsoever to do with jobs.

Another important point was raised by Seamus Coffey. He maintains not only do we not benefit from this inflow of intangible assets over this period, but in fact we lose out. We lose out because it is a key factor in the increase in our gross national income and, therefore, the increase in our contribution to the European Union budget.

He outlines how the payments from the Exchequer account for Ireland's contributions increasing from slightly less than €1.7 billion in 2014 to €2 billion in 2015 and again in 2016, to €2.3 billion in 2017 and €2.65 billion in 2018. There is a cost, in cent and euro, for the artificial inflation of our gross national income, GNI, and a significant reason is the increase in supposed intangible assets investment in Ireland.

This returns us to the point made about the finance curse and the fact that the country is being run for elites who do not live here. Policy has been captured by these elites and we go to such extreme lengths to shape policy for their interests that we offer them a tax haven and allow them to use this country to avoid paying large amounts of tax for years. We then end up paying for it through an increase in our contribution to the European Union budget.

For these reasons, the Government should agree to the proposal to have a report done on how much income we have foregone, the reasons the changes in the 2014 budget were made and the reason the Government, under pressure, agreed to reverse them. Does the Minister now accept it was not a good idea to introduce the change and that, rather than benefitting the real economy, we incurred only losses through the increased payment to the EU? Alternatively, does he maintain that the change was good for a certain period but is no longer a good idea? We need to know the answer to these important questions.

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