Gerald Nash (Louth, Labour) | Oireachtas source

I apologise to the Minister and colleagues for my delay in getting to the Chamber. The Labour Party is a pro-FDI party. We support the companies that are here provided that they comply with our laws, each and every one of them pays a minimum effective corporation tax rate of 12.5% and they treat their workers with dignity and respect and provide them with a decent wage. Many of those companies do all of that. It was the Labour Party, under the leadership of William Norton, which transitioned Ireland away from its isolationist and protectionist policy and towards an opening up to the world and the attraction of multinational corporations and foreign direct investment. The historical narrative generally is that this development was an exercise commissioned by Seán Lemass and T.K. Whitaker. In fact, that exercise was commenced by William Norton when he was Minister for Industry and Commerce.

We have always recognised that a generous and competitive rate of corporation tax does not a national industrial strategy make. We also know that a generous corporation tax rate was not the only reason that firms chose to locate to this country or have their European headquarters here. Ireland's educated workforce has long been one of our greatest assets. Following Brexit, Ireland, together with Malta, will be one of only two English-speaking countries in the European Union, and that positions us well for future investment. As the Minister knows, Irish workers are officially the most productive in the world, according to the Organisation for Economic Co-operation and Development, OECD, adding an average of nearly €87 to the value of the economy every hour that they work. No company in its right mind would relocate from such a country, which has fluency in English, a highly educated, productive and skilled workforce and access to one of the largest markets in the world. I say that in the context of some of the challenges we will face over the next few years in terms of international moves concerning the taxation of corporations and profits.

In our view, a minimum effective rate of corporation tax should be just that - a minium effective rate - and it should apply to each and every firm. It is a simple and straightforward position. There is a fairness argument here, as Deputy Shortall noted. We know that SMEs make up 99% of businesses in Ireland and account for more than 70% of employment. SME owners sometimes look askance at some of the aggressive tax planning that we know is carried on by multinational corporations. In the view of those SME owners and many others, that activity deprives the Irish economy of a sufficient tax base to resource the kinds of public services and supports our citizens need. We have a considerable focus at this time on the issues of corporation tax, fairness, tax justice and so on. We need to keep a focus on the evolving question internationally and respond to it in a fair, just and agile way.

I draw the Minister's attention to the skills gaps that are emerging. Dealing with those gaps will be exceptionally important in terms of our ability not just to attract but to retain and maintain investment in this country. We have one of the lowest levels of in-work training in the OECD, at 5.5%, compared with the levels in analogous states. Denmark, for example, invests really heavily in continuous lifelong learning and in-work training. Some 33% of all workers in Denmark receive some form of meaningful ongoing training, which will stand to the country in terms of its economic development. We need to look at that model and apply it here. In addition, it is a cause for concern that we have one of the lowest levels of digital skills in the European Union, which is kind of ironic given that we have so many enormously significant technology firms located here. One might wonder what the practical benefits are for citizens in having those firms here if we have such an enormous digital skills divide.

Finally, I draw the Minister's attention to the report last week by the Irish Fiscal Advisory Council, IFAC, which was really interesting and has some important messages for us. It notes that an international clampdown on aggressive tax planning, whether by the OECD's base erosion and profit shifting, BEPS, process or by the EU via Article 116 of the Treaty on the Functioning of the European Union, will likely blow a €2 billion to €3.5 billion hole in our tax receipts. This is revenue that IFAC has previously warned was "unsustainable" but which the previous Government had, in many ways, been using to cover massive cost overrruns such as that associated with the national children's hospital. Given the changes to our tax base, I do not think we will have that luxury any longer. Change is coming and we need, as a country, to lead that change and not bury our heads in the sand. That means co-operating with international reforms but also making sure that the kind of case we have been dealing with over the past couple of years never arises again. Notwithstanding that the State says the case was won, there is no doubt that there is reputational damage to Ireland arising from it.

We in the Labour Party have called repeatedly for the establishment of a standing commission on taxation, which would enable us to respond in real time to some of the aggressive tax planning that goes on. We need to be able to pay for the kinds of public services that we aspire to have in this country with a tax system that is objectively fair to everybody, including businesses both big and small. The people of this country are entitled to expect that the public asset gap can be closed over the next few years and that their hard work will be rewarded with the provision of free and accessible health services, decent social and affordable housing, publicly funded childcare and so on. That will only become a reality when we get our act together on corporation tax and make sure all corporations, regardless of their size and scale, contribute fairly in the context of a minimum effective corporation tax rate of 12.5%.

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