Tuesday, 13 October 2020
Financial Resolution No. 4: Corporation Tax
In fairness, people other than Teachta Doherty have been making these points for some time. I am satisfied with the Minister's answer on this resolution. I am glad we have had the debate because I have raised this issue at the Committee on Budgetary Oversight and the finance committee over the past number of years. We never discuss tax reliefs in the same way we discuss expenditure, and we should because they are expenditures of public money in exactly the same way as the budget we discussed today is. They are exactly the same, yet we do not discuss them. Tax reliefs are a shadow budget that the public does not see and I suspect most Deputies are only vaguely aware of it but the scale is absolutely enormous. Just one of the categories in that shadow budget of tax reliefs, namely, intergroup transactions, is the same size as the additional expenditure in the entire budget we discussed today. That was €16 billion according to the most recent available figures. That is huge. There is massive fanfare and debate all over the country today about the fact that additional expenditure of €17 billion has been allocated in the budget, but the amount for just one category in a litany of tax reliefs is €16 billion. That money is all going to between 20 and 30 companies, and it is only one relief.
The research and development tax credit involves an amount of approximately €700 million per year. One would think that such a tax credit is a good idea but would that €700 million be better off going to Google, Facebook, Pfizer, Eli Lilly etc., or being invested in our public universities for research and development purposes? I would love to see a cost-benefit analysis of the benefit that has for society and the economy, particularly given the Covid pandemic, how little money goes into Science Foundation Ireland and how underfunded research is in general.
It is worth noting, because it will not get discussed anywhere else in the budget debate, that the amount of money for health research in the health budget this year is static. There is no change. Is that not interesting? In the midst of a pandemic and when we are desperate for therapies, vaccine research and so on, one would think that a significant additional amount of money would be put into health research but there is not one cent extra. However, hundreds of millions of euro are going into the pockets of some of the big, private, for-profit pharmaceutical and IT companies.
There are other credits that I will not even go into but of the €180 billion pre-tax gross profits for all corporations, tax is only paid on approximately €80 billion. Such is the scale of the reliefs provided. That is a scandal that needs to be addressed and discussed and we need to assess the benefit of those reliefs overall. The point the Tánaiste does not really address is whether we have really looked at what the benefit would be if we redirected some of them elsewhere.
I do not think corporations would run out of this country if they were made to pay the 12.5% tax rate or even a little more. They need to be in the European Union. For the most part, they want to be based in English-speaking countries and there will not be many of those left in the European Union after the exit of Britain, so where would they go running, just because they are made pay 12.5% tax? I do not believe it for a minute. We do not need to get down on our knees and beg these people. They are making an awful lot of money; staggering amounts of money. It would at least be worthwhile for us to discuss the shadow budget of tax reliefs and allowances as part of these budgets, and whether these public moneys should be expended in boosting public research, public universities, public infrastructure and public services.