Peadar Tóibín (Meath West, Sinn Fein) | Oireachtas source

Yes.

It is important that we recognise in this Chamber the work of the International Consortium of Investigative Journalists and its efforts in bringing the Paradise Papers to light. One of the most damaging aspects of life on our planet is the gross wealth inequality between rich and poor. Oxfam has stated eight men now own half of the wealth on the planet. That is shocking and it is very difficult to get one's head around that fact. There are 1,876 billionaires on the planet, yet tonight 1 billion people will go to bed starving, without proper shelter or education and without the food they need to raise their families. I ask the House to think about that for one second. We know that there is a crisis in the distribution of wealth throughout the world. This country has huge experience of it. It is not like the 1960s or 1970s when there were rich and poor; the fact of the matter is that the gap between them is now yawning massively. The most affluent 20% of the population own about 73% of the wealth, which is another startling figure. The least affluent 20% own 0.2% of the wealth and this is happening under the Government led by the Minister of State's party. We regularly hear about the squeezed middle. The squeezed middle has as much wealth as the richest 5%. Is the Minister of State happy with this? Is he happy to preside in a state in which a very small number of people are exceedingly rich, while the middle and lower deciles of the population are getting poorer and poorer? This has not happened by accident; there are a number of key drivers of this wealth inequality.

11 o’clock

We have mentioned the regulations that people work under. Zero-hour contracts, for example, is a reason people are pushed into poverty.

One of the main reasons, internationally and in this country, we have this deviation between rich and poor is something called tax injustice. I am surprised the Fianna Fáil speaker said tax injustice is important, but that we cannot be seen to be moving towards tax justice by ourselves. Tax justice should be an objective in its own right. It should not be a strategic element that any country seeks to use. If everybody is saying we should be taxed justly but just not yet we will not achieve that objective.

The truth is that if one looks at the policies the Government and Fianna Fáil have been using over the last number of decades, tax injustice is part and parcel of it. I will tease through that in a short while. It is possible to be economically viable and prosperous and to be tax just. Sinn Féin has been making that point over the last number of years. When I was elected to this Chamber seven years ago I made the point repeatedly to the Government that there was a tax injustice at the centre of its policies. Ministers repeatedly stated that was nonsense and was simply untrue. The EU then intervened and stated that Fianna Fáil and Fine Gael's tax arrangements gave illegal tax benefits to Apple which were worth €13 billion. An international, independent organisation pointed the finger directly at the Government and said that what it was doing was illegal. Sinn Féin has been saying that for years. At that time Fine Gael should have had the decency to go on the correct path, but it decided to militate against that and spend millions of euro to prevent the collection of that €13 billion. Taxpayers, who were basically denied €13 billion, then had to fork out more money to prevent the receipt of that €13 billion.

Not only have we lost billions of euro in uncollected tax in this country, but the Government has done untold reputational damage to Ireland. This country's tax reputation has been atomised by successive Governments over the last ten years. If one travels anywhere around the world, international leaders, politicians and community people will all say that. Oxfam, for example, which is not a member of the hard left by any means, brands Ireland as one of the worst tax havens on the planet. It places us sixth in a list of 15 countries that facilitated large scale corporation tax avoidance.

Thanks to the Paradise Papers we have further insight into the mechanisms employed by Fine Gael. We know that three years ago, the Fine Gael and Labour Government created a budget which engineered a sweetheart deal for multinationals seeking to avoid the payment of billions of euro of tax. Former Minister for Finance, Michael Noonan, abolished the 80% rule, which meant that companies could claim up to 100% on profits arising from intellectual property investments. Why did he do this? Why would a Minister, at a time of economic difficulty, seek to give a 100% tax break to exceedingly rich corporations? Why? Nobody has answered that question yet. Not only did that create a difficulty in terms of the loss of tax earnings, but it actually created a hocus pocus surging of the Irish economy by 26% in 2016, on foot of the wholesale shifting of intangible assets onshore to take advantage of former Minister Noonan's gravy train tax break. This caused reputational damage as well. A Nobel Prize-winning economist, Dr. Paul Krugman, who is not an insignificant individual, described the phenomenon as "leprechaun economics".

Let us think about that. He described an output of the actions of the Fine Gael-Labour Party Government at the time as leprechaun economics.

On 11 October, in budget 2018, the new Minister for Finance, Deputy Donohoe, our knight in shining armour, reversed the tax dodging policy of the former Minister for Finance, Deputy Noonan, by way of capping the capital allowances linked to the investment of IP assets at 80% instead of 100%, which while not 100% what we want is a better move but one has to look at the small print. This tax reform introduced by the Minister, Deputy Donohoe, studiously avoids the whole-scale on-shoring of these assets up to the date of the budget such that the €26 billion hocus pocus surge of assets onto our GDP rates is avoided and thus the money generated from it, for years to come, is isolated from the new cap of 80%. This is a shocking indictment of the current Minister for Finance, Deputy Donohoe. It links him directly to the ongoing policy of tax injustice.

Mr. Seamus Coffey notes that if the cap applied to all claims, existing and new, it would lead to €1 billion in extra taxation for the State. If the Minister, Deputy Donohoe, had done the right thing and included all the intangible assets, we would have €10 billion in extra tax after ten years. The hocus pocus increase in GDP means we will have to pay €200 million extra per year to the European budget, which amounts to €2 billion over ten years, such that, in total, the action of the Minister for Finance, Deputy Donohoe, on budget day in this Chamber, over ten years will cost this State €12 billion. This is not my analysis but that of the analyst Seamus Coffey. That €12 billion is an opportunity cost. It is the diversion of money from everything that we need in this country into the pockets of large corporations or into the EU budget. This money would pay for the construction of 24 new hospitals, tens of thousands of new houses in a national housing crisis and additional railway lines, motorways and broadband provision for all. It is tax foregone by this Government. At the heart of the Fianna Fáil-Fine Gael instinct is deference towards multinationals. This is not a loophole but a policy choice of this Government.

A number of questions arise. I believe the former Minister for Finance, Deputy Noonan, and the current Minister for Finance, Deputy Donohoe, still have not answered these questions. First, why was the 80% rule not applied to all on-shored assets? Second, how do we fix this because it must be fixed, and fixed soon, if we are to realise the taxation that we are entitled to in this country. One of the ways we can do this is by ensuring that all of the assets that have been on-shored are covered by the 80% rule.

Is this the only tax dodging situation we have in this country? No, it is not. Deputy Pearse Doherty recently proposed an amendment to a Bill which would have ensured that the banks which have 20 years of corporation tax free earnings would have to pay some of that money in corporation tax but Fianna Fáil and Fine Gael refused to that this. There are numerous other tax breaks available for vulture funds in this country. Until such time as we require companies to pay their fair share of tax, we will have people in poverty, homelessness and major difficulties.

An argument is made by Fianna Fáil and Fine Gael that if we mess up the taxation system and create some justice in it, we will threaten foreign direct investment. Interestingly, foreign direct investment is typically used as a tool in an emerging economy to create the necessary industrial function in order that a country can transition to having a stronger domestic economy, but for some reason, this country has never decided to make that transition. So much of the economy is still focused on foreign direct investment. I welcome foreign direct investment and think it is good, but it should not be pursued in the absence of seeking to pursue having a stronger domestic economy. What is interesting is that the foreign direct investment sector wants the same things as the domestic economy sector. It simply wants to have access to customers, an educated and skilled workforce and decent infrastructure, including telecommunications, all of which necessitate investment in infrastructure, but everything is in a mess in that regard. There has been a car accident on the slip road on the M50 and all of the roads leading to the M50 will be jammed for up to two hours such is the tightness of our infrastructure. There are major infrastructural gaps. If we were to invest in removing them, we would make business easier for those involved in domestic business and engaged in foreign direct investment, but we have the second lowest spend in Europe on infrastructure. The only country that has beaten us to the bottom is Romania because the Government has put all of its eggs in one basket. It has stated that having a bargain basement corporation tax rate constitutes our competitive engagement with the world and until that changes, there will be major difficulties.

Major problems have come to light with AIB and the rest of the banks. It is startling that a short period after AIB received €7 billion from taxpayers in a bailout, it developed a business strategy to attract Irish people as part of which they would not paying tax. Do the banks not know that it is circular, that taxpayers' money cannot be put into the banks to bail them out if they seek to break the social contract with citizens under which they pay taxes to receive services and make sure nobody is left behind?

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