Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

We need to have a rational and sensible debate on corporation tax. This is no reflection on the passion I heard from Deputy Ring but, unless I am misreading it, that is not what this amendment is concerned with. Some companies operating in Ireland will pay a higher rate of tax of 15%. That is acknowledged in the amendment. The Minister for Finance signed up to that on behalf of the State as part of the OECD negotiations. It was the Minister's view, shared by us, that it would have been better if we were able to maintain the 12.5% rate, but we were in negotiations with well over 130 other countries. In my view, the 15% rate allows Ireland to remain competitive, especially given that the Commission has allowed us to operate a dual rate, which means that only those companies that fall under the scope of the OECD will be subject to the minimum effective rate of 15%. As outlined in that agreement, other companies that have less turnover will be subject to the rate that we set in this Parliament, which is 12.5%.

The amendment concerns what we need to have a discussion on. The rate is going up. That is the reality of it for some of these companies. As these are some of the largest companies in the world, there will be a significant tax benefit to the State as a result, if all other things remain equal and their footprints remain in Ireland. These companies should remain here because this will happen not just in Ireland but around the globe so there is no benefit to them in switching to another jurisdiction.

The question here is about having a sensible discussion. Major changes are happening on an international level, which none of us foresaw approximately ten years ago. It is not just about the rate but also about pillar 1 of the OECD agreement. While the dust settles on that agreement and the details are figured out, and some of the devil will be in the detail because interests will start coming to the fore and there will be attempts to exclude this, that and all the rest, as a Parliament we need the type of assessment that is being proposed by Deputy Boyd Barrett. I know he and his party would like to go much further than what is outlined in the amendment. We need an assessment of what 15% means for these companies. What does it mean for the State's revenue? We see the returns coming in today, which are hugely beneficial to the State, of €2.8 billion more than was forecast for this point of the year. These are resources all of us want to ensure we have because that is how we make sure there is a proper contribution. We should never rely on multinationals. It is an additional benefit if they invest in a play park or football field down the road but, first and foremost, they should pay tax so that we in this State can budget for those types of resources for the community.

We need to get the information we are asking for. We should not have to wait until next year for it; we need it at an early stage. Early indications are that pillar 1 is estimated to cost approximately €2 billion. It may cost something shy of that because of some of the changes that happened, but there is a good likelihood that the 15% rate in pillar 2 will offset quite a substantial chunk of that €2 billion. Instead of scrambling in the dark, an assessment needs to be carried out at an earlier stage. We can understand that this might be a moving feast, but there needs to be a proper assessment of what this looks like and what it means. What type of revenue is pillar 2 likely to bring in? The budgetary forecast for the next number of years has already factored in a reduction of €2 billion in corporation tax because of pillar 1. The question we have to ask ourselves at some point is whether that is an appropriate assessment. That assessment was always done with the view that the pillar 2 rate would be kept at 12.5% because that was the negotiating position of the State at that point in time. We now know that the rate is settled at 15%, which means that the number will change, possibly substantially.

We need to have a sensible debate. The debate is much wider than just the numbers that will come in because it is very difficult to forecast corporation tax receipts. The pandemic has had a major impact on those receipts because some of the multinationals are in the pharmaceuticals area, which means the global demand for their products is resulting in higher tax revenue for the State. Any tax head that brings in €2.8 billion is significant, but bringing in €2.8 billion ahead of profile, bringing us up to €14 billion, is hugely significant. It has to be carefully nurtured into the future. That is not to suggest in any way that we do not tax multinationals at the rate of 15%, as has been agreed, or at 12.5% for those that fall outside the scope of the agreement. Our questions are genuine and relate to how we can meet those obligations so that we have a basic minimum effective tax rate. The agreement is not about a headline rate but a basic minimum effective tax rate.

The discussion on all of this needs to be much wider. While I maintain that our competitiveness is assured, even with the OECD agreement, it can only be assured if we invest in other things that attracted many of the companies Deputy Ring talked about to County Mayo, in addition to companies that come to my county and other parts of the region. Our tax rate was an offering we had, and we must always allow ourselves to be competitive on tax, but we also had a highly skilled workforce. We are falling down the international leagues when it comes to our education. Our other offerings that attracted companies included our access to Europe, which is more important now than ever with Britain withdrawing from Europe, the fact that we are an English-speaking nation and our infrastructure. Housing is now a problem for our competitiveness, which is an issue the National Competitiveness Council has raised. When we talk about ensuring these tax heads are maintained, nurtured and, hopefully, grown in the future, we have to look at all the ingredients that ensured these companies came in the first place, how we retain them and how we can attract more into the future.

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