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

I seriously challenge anybody to read the figures in this table. This is with regard to access to important information. This is public money that is every bit as real as money that is announced in every budget to great fanfare, much public attention and scrutinised heavily with regard to the amount spent directly on health or education and allocated to various Departments. Depending on how it is calculated, and there is an interesting debate on what is in the base and not the base, the budget scrutiny committee estimates there is approximately €15 billion worth of tax expenditure every year and most of this rolls over from year to year. This is a lot of money. I emphasise that the Minister has had meaningful engagement with me on this matter. I also acknowledge that in the area of film relief he has genuinely listened and that he has also made some positive moves on IREFs and so on in the budget. However, as I have said to him many times, there is a whole lot more that needs to be looked at. Frankly, I still believe this is a massive scandal. To emphasise the point, in 2012, at the bottom of the crash, €74 billion of pre-tax profits were recorded. The figure for 2017 was €159 billion, which means profits have doubled more or less. The problem is that even the very modest 12.5% corporate tax rate is not paid on these enormous profits, which have doubled. When all of the loopholes in the interesting table that people cannot read are applied, the taxable income, as opposed to the pre-tax profit, drops from €159 billion to €79 billion. We have €80 billion worth of loopholes, expenditures and reliefs that write down the taxable profit so that the effective rate of pre-tax profits is not 12.5% but 5%. If the Minister imposed a minimum effective rate on pre-tax profits, he would generate approximately €9 billion extra in revenue a year and these companies would still be very profitable.

There are lot of areas to look at but the one I really want to stress this year in the short time I have is intra-group transactions. I had to really look closely at the table to see this one. Intra-group transactions are mostly transactions between subsidiaries of the same company lending each other money. One company sets up a lot of subsidiaries and lends itself money and charges itself interest.

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The interest it has to pay back to itself is tax deductible, thereby writing down its profits and allowing it to pay less tax. We discovered this with, for example, Larry Goodman's companies in Luxembourg and so on, but they are all at it.

It is amazing that the figure on this fascinating list for tax forgone due to intra-group transactions, which amounted to €9 billion in 2016, saw a massive jump from the previous year. I do not have the exact figure, but it was approximately €2 billion or €3 billion then. Guess what it was in 2017. It was €16 billion. It went from €9 billion to €16 billion between 2016 to 2017. God knows what it will be in 2018 and 2019. This is the major mechanism through which some of the most profitable companies owned by some of the richest people avoid paying their proper share of tax. They are lending themselves money and charging themselves interest, paying which reduces their profits.

An interesting provision is that of losses forward whereby the banks that brought this country to its knees can use previous losses to write down their tax liabilities, meaning that Bank of Ireland, AIB and so on pay virtually no tax on the enormous profits they are now generating. Another interesting provision is the category called "Certain company reconstructions and amalgamations". It was in place last year but I am not sure as to whether it was in place the year before. This tax expenditure increased from €189 million in 2016 to €425 million in 2017. This is tax avoidance on a massive scale and is robbing the taxpayer of significant amounts of money that could go into health, education, public transport or a just transition in terms of climate change. One could go through the list of possibilities.

I appeal to the Minister. A report on this is important. The Committee on Budgetary Oversight has started some of that work, but the next issue we need to examine closely is intra-group transactions. That the figure mushroomed from €9 billion to €16 billion in one year shows that it has become the major loophole through which many of these companies are writing down their tax liabilities. We need to examine what is going on, who is benefitting from the loophole and how to shut it down.

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